Royal Mail shares rocket 38% on frenzied first day of trading as fatcats rake in ... - Mirror.co.uk

David Cameron's fatcat pals creamed off millions of pounds in Royal Mail profits today  after the brazen Government flogged it off on the cheap.

Taxpayers were left nursing a £640million loss from the controversial sale, as shares in the postal giant rocketed almost 38% from £3.30 to £4.55 in a trading frenzy.

It meant the £1.72billion the taxpayer got could have been worth more than £2.3billion.

Labour leader Ed Miliband said: "This is a fire-sale of a great British ­institution at a knock-down price.

"It says it all about this Government – bad value for taxpayers, bad value for customers of Royal Mail. It is an ideological, dogmatic privatisation by this Government, made even worse by under-valuing Royal Mail."

But while ordinary taxpayers were hit, the Prime Minister's friends in the City cleaned up.

Hedge fund Lansdowne ­Partners, founded by Tory donor Sir Paul Ruddock, stood to make almost £20million after bagging a reported £50million in shares before the price soared.

Former chief Sir Paul, who retired this summer after being knighted by the Prime Minister last year, has given more than £500,000 to the Tory Party in donations.

Lansdowne refused to comment.

As well as giant city firms, foreign governments also mopped up millions in profits. Taxpayers in Norway, Abu Dhabi, Kuwait and Singapore each pocketed an estimated £18million after also buying £50million worth of shares at the Government's knock-down price.

 

Shadow Business Secretary Chuka Umunna blasted the deal.

He said: "Ministers promised to prioritise small investors, yet the majority of shares that have passed from public to private ownership have not gone into the hands of ordinary people, but to big-money investors in the City and overseas.

"Labour – alongside the majority of the public and those who work for Royal Mail – opposed privatisation from day one.

"But the last thing we want to see is big investors make a fast buck at taxpayers' expense."

Save Our Royal Mail campaign director Mario Dunn said the taxpayer had been "ripped off".

The 690,000 ordinary investors, who each bought around £750 worth of stock, gained more than £270 each. And 149,632 postmen given £2,200 worth of free shares also saw their value rocket.

But Communication Workers Union boss Billy Hayes warned giving staff shares would not stop them striking against privatisation.

He said: "Shares make no scintilla of difference to workers who are far more concerned about their jobs."

The strike ballot closes on Wednesday, with the result announced the same day.

 

Today the union protested outside the London Stock Exchange and Mr Hayes said Business Secretary Vince Cable had made "one of the stupidest decisions" in years.

He even said that foreign monarchies would have more power over the Royal Mail than the Queen.

It forced Mr Cable to confirm some shares had been snapped up by the Kuwaiti sovereign wealth fund.

Mr Hayes said: "If you sold your house and then the buyer sold it to someone else the next day at a 38% profit you'd ask, 'What was the estate agent doing?'

"We're two years short of its 500th anniversary and we're selling it to Kuwait and Singapore. It's wrong for the British public."

TUC General Secretary Frances O'Grady also piled on the pressure. She said: "Privatising Royal Mail has become little different from selling five pound notes for four quid.

"No one can be blamed for wanting a share of that, but let's not forget that this has taken something that belonged to all of us and given a large slice away for free to those who could afford an entry ticket."

In total, the Government sold 33% of shares to the public and gave 10% to postal workers. Taxpayers will keep a 30% stake with remaining stock flogged off to giant investors.

At the start of the day the Government valued the whole postal giant at £3.3billion, but after a frenzy saw 10 million shares traded in the first 30 seconds as the market opened, the figure soared by £1.2billion.

Mr Cable insisted the rocketing share price was of "no significance whatsoever".

He added: "We fixed the price to get value over a long-term period. We are not interested in the spivs and speculators."