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.
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.”
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.”
I really, really had hoped for better from Cable. He’s not out of his depth, he’s just done what he feels to ensure that he’s not blamed for the float “failing” – and be damned to the costs.
Nils Pretley in The Guardian offers Five lessons Vince Cable must learn from the sale of Royal Mail.