Jim Armitage

Letter from the Deputy Business Editor: Royal Mail's hedge fund shareholders

 

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Vince Cable and Michael Fallon must be the only two people in the world who still don’t believe the Royal Mail was sold off too cheaply.

On Day One, the stock market value of the company rose by £750m. That’s three-quarters of a billion pounds that could have gone towards plugging the deficit. Since then, of course, the price has risen ever higher.

But try telling that to Messrs Cable and Fallon. No, they declare. The price was right. Both are dogged under fire – veteran politicians tend to be. We are unlikely to get any apologies or admissions of error.

But cracks are emerging over their  scandalous refusal to reveal the identities of the gilded few “priority investors”, who were given extra-large share allocations. Those who sold their shares have made profits of more than £300m to the detriment of taxpayers, so it is clearly in the public interest to know who they are.

Late last night, the Government finally conceded – after much obfuscation – that some were hedge funds.

This is not necessarily a bad thing. Some hedgies stick around for years, but the majority do not, preferring to duck in and out when a quick profit has been made. It actually makes sense to give them a slug of the shares in a flotation for this very reason – their rapid-fire buying and selling means there’s always a ready supply and demand when other investors want to trade.

But we weren’t told all this in the run-up to the flotation. Instead, the politicians gave us hollow promises that long-term investors would be favoured over short-term speculators. The truth is that once a service is privatised, no democratic government can control who buys and sells its shares. What they can do, though, is be honest about it.

i@independent.co.uk

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