The Government were at pains to limit private investors to a £10,000 maximum holding, yet much of the Royal Mail has ended up in the mitts of the City. Why?
Feeding frenzy?Much of the Royal Mail grab was inevitable. The benign-sounding The Children's Investment Fund (TCI), headed by Chris Hohn, an activist shareholder with a strong philanthropic bent, had to declare his stake after biting off a 5% chunk of the 500-year-old company, taking 58.2m shares.
The news will continue to anger unions, not to mention add to taxpayer disquiet that the sale undervalued the former public asset, preparing the way for hedge funds and other investors to pick over the Royal Mail corpse, with speed.
TCI has around £8bn in assets under management and has previous form for buying into operations with existing turbulence (News Corp for example). Other hedge funds will have also bought in, though no names need to be declared until a buyer has loaded up on more than 3% of shares.
AnswerablePreviously Business Secretary Vince Cable claimed Royal Mail would attract long-term blue-chip investors, away from state control. However not all hedge funds are the same: Hohn gives 0.5% of his assets away to charity each year through its own foundation (in the past there's been an emphasis on HIV prevention and emergency humanitarian aid).
That doesn't make Hohn cuddly - but there's also some grudging respect for Hohn. He's unusual. More fundamentally for Royal Mail, it means life will likely get turbulent, sooner rather than later.
Currently Royal Mail shares are selling for 526p, well above the 330p float price. Next month Vince Cable will answer to MPs why Royal Mail was sold at 330p, subsequently accelerating way beyond that level after shares were released for public sale.