UK lawmakers launch Royal Mail inquiry as shares peak

LONDON (REUTERS) - Shares in Britain's Royal Mail peaked 48 per cent above their privatisation price on Tuesday as a committee of lawmakers said it planned to summon bankers and the business minister to a parliamentary inquiry into the sale.

The government, which last week priced the hugely oversubscribed sale of the near 500-year-old postal service at 330 pence (S$6.57) per share, has been accused of undervaluing one of Britain's biggest state sell-offs for decades.

A parliamentary committee that scrutinises government work said it wanted investment bank Lazard, an adviser on the privatisation, and Business Secretary Vince Cable to appear before the panel to discuss the deal.

A spokesman for the Business, Innovation and Skills committee said the session was expected to take place in November.

On its first day of full trading, the Royal Mail stock hit a record high of 490p and by 1410 GMT was trading 6p higher on the day at 481p. The shares initially rose nearly 40 per cent last Friday when they began trading conditionally.

Before Tuesday, only institutional investors such as pension funds and individual investors who ordered stock through a broker offering conditional trading were able to sell, not those who bought through the government's official website or by post.

Last week, before the sale had been priced, the committee quizzed Cable on whether Royal Mail could be undervalued after some analysts said its London property portfolio may be worth much more than the official estimates.

A poll by YouGov over the weekend showed while opposition to the privatisation had fallen, with 56 per cent believing it was wrong compared with 67 per cent in July, 43 per cent said they thought Royal Mail had been sold for less than it was worth.

Four percent said the price was too high and 17 per cent said it was about right.

The Communication Workers Union (CWU), which represents postal workers, is due to announce on Wednesday the result of a strike ballot called in response to the privatisation. The earliest it could take action is Oct 23.

"We're confident our members will return a 'yes' vote in tomorrow's ballot result... strengthening our position to secure a deal on protecting jobs, services and terms and conditions in the company," said Mr Dave Ward, CWU deputy general secretary.