Vince Cable forced to reveal more data on Royal Mail investors

Business secretary bows to political pressure to release details of 16 priority investors revlations over £8m profit by Lazard

Vince Cable bowed to political pressure on Friday to release details of the precise number of Royal Mail shares allocated to 16 priority investors in the flotation of the 500-year-old postal service.

The investors were picked because they gave firm commitments to back the sell-off at an early stage. The business secretary revealed the number of shares sold to them following revelations that the investment arm of his advisers at City firm Lazard had made an £8m profit selling shares in the first week.

The list published by the Department for Business, Innovation and Skills showed that City fund manager Threadneedle received the highest allocation – about 19.5m, equivalent to a 2% stake – and Third Point, the US hedge fund led by activist investor Daniel Loeb, the smallest at 5m – 0.5% of the company.

It shows 46m of the 220m shares allocated to the 16 priority investors were to hedge funds, 51m to sovereign wealth funds in the Middle East and Asia and the remainder to big City investors.

During questioning by MPs on the business select committee this week, Cable offered "absolutely no apology" for the pricing of the shares at 330p, despite their immediate 38% rise in value.

He refused to publicly name the six "priority investors", who profited from selling their stakes almost immediately. When asked if some of the priority investors had sold shares quickly "to make a quick buck", he replied: "Yes, that is what happened. It is how markets work."

Cable originally said he would provide the MPs with a list of the 16 priority investors on the condition the names were kept confidential, but then reluctantly published them.

Information previously published by the National Audit Office appeared to show that Third Point had sold its shares along with financier George Soros, but that more traditional investors such as Fidelity, Schroders and Standard Life had also sold part or all of their stakes. Most of the 16 firms contacted by the Guardian either declined to comment or failed to respond. However, investment firm Henderson said it still owned shares. Threadneedle said it was "one of the Royal Mail's largest shareholders at 1.5% and is a committed investor in the company." Lansdowne said it had not sold shares.

Cable wrote a letter to shadow business minister Chuka Umunna in which he revealed that two of the priority investors had received additional shares.

"For completeness, I should add that Capital Group and BlackRock had a number of other accounts that were allocated shares," he wrote.

In reply, Umunna said he was "demanding answers" about which of the funds immediately sold their holdings and said he would ask further questions in parliament.

Capital, which was allocated 17.5m as a priority investor, received another 5.1m shares allocated across two other accounts and BlackRock, which was allocated 19.2m as priority investor, another 2.35m shares across three other accounts.

Martin Donnelly, permanent secretary for the business department, had said in his appearance before the public accounts committee: "We were trying to build a stable investor base. We did not seek formal commitments from investors to stay investors because that would have come at a price, and we did not want put that price on the taxpayer."


Jill Treanor, Angela Monaghan and Rupert Neate

The GuardianTramp

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