Investment bankers, when pitching for flotation work, perhaps behave like estate agents: they wave attention-grabbing figures in front of the seller to try to win the business, and only later say what they really think.
Even so, the £10bn that JP Morgan thought Royal Mail could be worth deserves further investigation. One has to deduct Royal Mail's borrowings to get a true comparison with the £3.3bn at which the company's equity was priced. But, since the debt was only about £1bn, the numbers still imply a gulf in valuations.
The best solution here would be to summon the relevant JP Morgan banker to appear before the select committee inquiry into the sale of Royal Mail.
He or she could then explain in detail why the flotation was massively underpriced or confess that JP Morgan's big brains sketched their numbers out on the back of a fag packet. Either version would be worth hearing.
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