July 9 (Bloomberg) -- U.K. Business Secretary Vince Cable ordered a review of how the government conducts privatizations, two days before a report that may criticize his handling of the sale of Royal Mail Plc.
Ministers have insisted, most recently before Parliament’s Business Committee in April, that they set the right price for Royal Mail when they sold most of the postal company in October. The stock soared on the first day of trading in October, and in January was briefly more than 80 percent above its 330 pence offer price. It closed today at 469.7 pence, 42 percent above the offer price.
An April 1 National Audit Office report concluded that an attempt to lock “priority investors” into the initial public offering meant the government “took a cautious approach” and accepted lower proceeds. The Business Committee is due to publish its own report into the sale on July 11, and Cable said today he’d asked Paul Myners, a former Treasury minister and ex-chairman of Marks & Spencer Group Plc, to look at whether there are other ways to manage IPOs of state assets.
“I have asked Lord Myners to conduct this review, following the recommendations of the National Audit Office, to help me assess whether changes are needed to the current system government operates for the sale of its assets,” Cable said in an e-mailed statement. “Lord Myners is uniquely qualified to carry out this work –- with a background in government and the City.”
Myners will lead a panel that will report to Cable later this year, the business secretary said.
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