Two banks told the government that Royal Mail was worth £5bn – half as much again as it was sold it for – before the sale, fuelling allegations that it was undersold.
According to the Financial Times, at least two investment banks priced the sale at £5 a share instead of the £3.30 it was sold at. The shares reached £5 in trading on Friday.
The FT reports that government officials claimed other banks suggested a price as low as 260p. The officials also claimed the higher bids came from banks that were ill informed about Royal Mail's finances.
But it was big financial institutions oversubscribing to the share sale and buying the shares once traded that pushed up the price. MPs are the grill the sale advisor Lazard over the pricing.
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