City and
Cut price sales
Savour the scene among the merchant bankers when, the other day, a round robin came in from the Treasury. Dear Sirs (this ran), We are getting worried about our sales of state assets, and we are therefore writing to you and to your competitors, to ask if you have any ideas about how the thing could be done more cheaply? — Oh for the pencil of H. M. Bateman to sketch all those glazed eyes, to chart the universal want of enthusiasm! Ask the merchant bankers how to do things differently, or more ingeniously, or even in suitable cases free of charge, but more cheaply . . .? Somehow, Nigel, alas, they have not felt the vocation. The sales rumble forward on their switchback course. Enterprise Oil lands with a bump. Behind it come Sealink, and Jaguar, and Telecom, and British Air- ways. Good ideas, the bankers would say, should now be at a premium. The Treasury for its part felt, right from the beginning of the switchback, that the City advisers could do better for the money — or better, anyhow. The early sales were fixed-price of- fers in the City's traditional style, where, if all goes well, the investment institutions pick up a fee for underwriting the issue, and the speculative buyer (the 'stag') picks up a quick profit by applying for the shares and selling them on. That has its merits, but to Treasury eyes it looked altogether too cosy. To political eyes it looked, or could readily be made to look, an each-way loser. If the sale went well (as did Amersham) that was handing over the nation's assets to the speculators' gain. If it went badly (Britoil) that was just a flop. After Enterprise, Stanley Orme (for the Opposition) contriv- ed to back both these horses. The sale amounted to robbing the nation, he said, and was a bigger flop than Britoil. Steady on, Stanley, one or the other, surely? Or was he wiser than he knew? The shares were left with the underwriters. Rio Tinto-Zinc, which wanted half of them, were rationed to 10 per cent. When dealings began, RTZ bought more in the market and drove the price up — so that everyone who sold to RTZ got a better price than the Govern- ment had. Oh, tut.
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