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.

Find up to date information on the FTSE 100 and spread betting strategies at City Index

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.