MPs question Royal Mail banks
Members of the Business Select Committee had a gruelling session with Richard Cormack, Goldman's co-head of equity markets, and James Robertson, a managing director at UBS, over privatisation of Royal Mail and their handling of the share sale.
The value of Royal Mail was at £3.3bn when it debuted on the London Stock Exchange last month, but moved up 38 per cent on the very first day of trading.
This led to allegation that Royal Mail had been severely underpriced, costing the taxpayer billions of pounds. This argument was reinforced when it emerged that JPMorgan had valued the business at up to £8.5bn in a futile pitch to run the flotation.
It was also made known that the Business Secretary, Vince Cable, rejected the opportunity to elevate the initial share price from 330p to 350p in the days leading up to trading.
The banks in the group that marketed Royal Mail to investors shared fees of 0.8% of the money raised, with Goldman and UBS splitting an extra 0.1% for leading the operation. Lazard, the government's independent adviser, has been paid £1.5m with no fees deferred.
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