CVC looks at delivering Royal Mail bid

Private equity group CVC Capital Partners is drawing up plans to buy a stake in Royal Mail.

Private equity group CVC Capital Partners is drawing up plans to buy a stake in Royal Mail

CVC’s interest is at an early stage and the firm is believed to be worried about the reputational risk of any deal because the part-privatisation of Royal Mail is so politically sensitive.

The move to sell a minority stake in Royal Mail, led by Lord Mandelson, the Business Secretary, has drawn criticism and any deal with a private equity firm, which are treated with suspicion by many trade unions and Labour MPs, is likely to exacerbate their anger.

CVC already has experience in postal services after buying a 22pc stake in Post Danmark from the Danish state in 2005. It then went on to buy half the Belgian postal service and last year announced a merger with Posten, the Swedish post office. CVC is considered to have played a key role in modernising the postal services. In December, Lord Mandelson accepted a recommendation that Royal Mail should forge a “strategic minority partnership” with a private company.

Richard Hooper, a former deputy chairman of the communications regulator Ofcom, said that the service, which has lost out on valuable commercial contracts, requires radical action if it is to survive an era of email and mobile telephones. As part of the review, Mr Hooper visited Post Danmark.

TNT, a Dutch firm, was believed to be a front-runner to take a significant minority stakeholding in Royal Mail, investing as much as £3bn for a third of the company. Another interested party is thought to be DHL, the parcel courier, which is part of Deutsche Post.

The proposals are expected to be put to Parliament within weeks and, if passed and a deal is agreed, it would be the first time since the national postal service was set up in the 19th century that any part of it has fallen into private hands.