Monday, 18 November 2013

Questions for Royal Mail valuers

 Bearing a recent occasion in mind, when the security chiefs were asked questions by a parliamentary select committee which were of the "What would you like to talk about today?" variety, with representatives from Goldman Sachs and UBS due to face MPs this week after the sale of Royal Mail, perhaps some sample questions could be suggested?
      For instance, why was your valuation of the publicly-owned company so much lower than other banks` valuations, at £3.3bn rather than the £10bn of JP Morgan? So low, in fact, that the share price rose 38% on the first day of trading! Is it not true that the lower the valuation of a company making millions of pounds profit every year, the more City investors would prosper? With banks becoming increasingly adept at fixing Libor rates and such like, could not something similar have happened with this valuation?
     Can we rest assured that the investment bankers involved in the valuation did have the necessary experience and knowledge required for such a task, and were not totally lacking in either, as it seems was the case with the chairman of another bank recently in the news? We tend to rely on the Financial Service Authority checking on such things, but perhaps our faith is misguided.
     Did the government at any time suggest to the valuers that a low valuation would be appreciated? This question is relevant because, of course, there is a suspicion that the reasons for the company`s privatisation were not economic, but political and ideological. With the coalition constantly stating cuts have to be made as money is in such short supply, one would have presumed keeping Royal Mail as  a going concern, with employment, taxation and profits all benefitting the Treasury, was the best option; if selling was the choice, the more they sold Royal Mail for the better, far nearer JP Morgan`s valuation; selling at below the correct market price suggests the government was more concerned with gaining votes for the 2015 election by ensuring  the buyers made a quick profit than doing a good deal for the taxpayer or the employees.
   Such a line of enquiry might generate some detailed analysis of what actually happened, and who knows, even some truth; goodness knows how we are so used to being lied to when it comes to government announcements, whether they are about reasons for wars, the necessity of austerity, or the numbers of unemployed and state of economy, so it`s highly unlikely we will get to learn the truth about this!

No comments:

Post a Comment