GIC boosts stake in Royal Mail to 4.1%

SINGAPORE - Singapore sovereign wealth fund GIC disclosed in a filing on Friday that it holds a 4.1 per cent stake in the newly-privatised British postal operator Royal Mail, making it the second-largest investor after controversial hedge fund the Children’s Investment Fund.

According to the filing, GIC increased its holding from 29.75 million to 41 million shares.

A GIC spokesperson confirmed the investment but declined to comment further.

The London-based Children’s Investment Fund owns a 5.8 per cent stake in the 500-year-old delivery service, which listed on the London stock market in a high-profile float earlier this month.

According to a regulatory announcement on Tuesday, the hedge fund bought almost 58.2 million shares worth about 286 million pounds (S$573.4 million) at its current share price of 492 pence.

The privatisation of Royal Mail has been heavily criticised by opposition lawmakers and labour unions fearful of changes to their pay and conditions.

The shares have rocketed almost 50 per cent above their 330 pence issue price, sparking criticism that government had undervalued one of Britain’s biggest state sell-offs in decades.

As part of the privatisation, Royal Mail staff will be handed 10 per cent of the postal firm. The British government currently holds a 37.8 per cent stake.

Earlier reports said JPMorgan had told ministers ahead of the Royal Mail flotation that they could sell the postal business for 10 billion pounds, around two and a half times more than the 3.3 billion pounds the government finally received for it.

The official float figure excluded about 800 million pounds of debt, which included would give the state-owned business an “enterprise value” of 4.1 billion pounds but still almost 6 billion pounds lower than the price tag suggested by JPMorgan.

The US bank declined to comment but well-placed sources confirmed the figure of 10 billion pounds and made clear that others pitching to sell the Royal Mail on behalf of the government had also priced the mail company as high as 7 billion pounds. Agencies