Royal Mail 'seriously underpriced', says broker

Royal Mail shares were seriously underpriced by the Government and its advisers, the head of Britain's biggest retail stockbroker said yesterday as the shares once again rose sharply, to stand 48 per cent up on the offer price.

Peter Hargreaves, the founder of Hargreaves Lansdown, whose systems crashed when conditional dealing in Royal Mail shares started last Friday, said: "The shares were absolutely underpriced and the issue managed badly. The fact that the price is where it is today tells you that the shares were sold too cheaply."

The shares, which were sold by the Government at 330p, ended at 489p yesterday as unconditional trading began. The rise leaves private investors with a paper profit of £361 on their original outlay of £750. "There should have been far more consultation with the retail market," Mr Hargreaves said: "There's not one person in the City or Canary Wharf who understands retail and we were not consulted once."

Mr Hargreaves said the complaints his firm received on Friday had been withdrawn as the share price carried on rising.

However, that rise could be stymied after the result of a strike ballot by Royal Mail staff is announced today. Royal Mail's chief executive Moya Greene suggested the company should have protection from strike threats. Ms Greene said: "We need to start thinking about what sort of protections do we need as a company from our people from what has been probably too quick an approach to resort to industrial action. I just think we need to look at alternative ways to resolve disputes."