Price is right at Royal Mail insists Cable

VINcE cable yesterday criticised city analysts who have valued Royal Mail at more than £4bn.

He said stockbroker Panmure Gordon, which accused the Government of ‘getting it wrong’ on the valuation of the float last week, was an ‘outlier’.

The Business Secretary is overseeing the privatisation, which is one of the largest since the days of Margaret Thatcher.

Shares are expected to start trading at 330p tomorrow, valuing the postal service at around £3.3bn.

But some city analysts have said this is too low – suggesting shares will soar once trading begins.

Last week Panmure Gordon’s managing director Ge r t Zonneveld said the listing was ‘an exceptionally good entry level for investors’ because ‘I think they’re more than £1bn too low’.

But cable, during a hearing with Parliament’s influential business committee yesterday, hit back at Panmure. He said: ‘There are a lot of equity analysts out there. This is one, and it’s an outlier.

‘I don’t want to rubbish them as an institution – during the banking crisis they were very good and got things right that a lot of other people got wrong – but on this particular case they are way outside the estimates of most of the equity analysts’. He added: ‘ The price could go up, the price could go down, I think most people understand that.’

almost a million people joined the scramble for Royal Mail shares, he revealed, with the privatisation seven times oversubscribed as more than 700,000 registered to buy into the floatation.

He urged ‘proper restraint’ over the company’s pay policies in the private sector, and said the Government would use its remaining shareholding to vote against excessive wage increases for top bosses.

The Business Secretary would get the final say on which way the Government votes, his department confirmed yesterday.