Govt defends Royal Mail share pricing

<p>Shares in Royal Mail are priced correctly, says the government.</p>

The government has hit back against claims it has undervalued Royal Mail, ahead of the privatisation of the company.

Business secretary Vince Cable stated that the value of the firm – with shares expected to go on sale between £3 and £3.30 later this month – is correct.

Shadow business secretary Chuka Umunna had claimed investors and hedge funds would all benefit from the share sale and the taxpayer would miss out, reports BBC News.

A note from Panmure Gordon also claimed Royal Mail is worth around £4.5 billion, well in excess of the government's top estimate of £3.3 billion.

However, Mr Cable insisted in a letter to the shadow business secretary that the price of the firm was set after long consultations with investors.

"It is irresponsible to imply that a share offering looks significantly undervalued," he said.

The government previously revealed that ten per cent of stocks in Royal Mail are going to be given to employees of the postal service.

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