Reuters/London
Britain is selling a majority stake in Royal Mail at 330 pence a share following massive investor interest that values the postal service company at £3.3bn ($5.26bn).
In one of Britain’s biggest privatisations for decades, Royal Mail yesterday priced its London listing at the top of a 260 pence to 330 pence range in a sell-off which will flush around £2bn into government coffers.
But the sale has been criticised by the opposition Labour party as under-pricing Royal Mail and short-changing taxpayers.
Royal Mail’s offering leaves the government with a 38% stake, it said yesterday, but this could fall to 30% should it choose to exercise an over-allotment option.
The government made 33% of shares available to the public, more than a 30% allocation it had expected, after the sale was oversubscribed seven times.
That left institutional investors with 67% of the offering.
Royal Mail’s flotation, which has gone ahead despite the threat of strike action and criticism from Labour, follows three earlier attempts by different governments to privatise the business that has been in state hands for almost 500 years.
Those attempts over the last 19 years have failed due to opposition from within the governing majority, which feared an electoral backlash from tampering with a revered institution whose red post-boxes are known around the world.
Business Secretary Vince Cable said yesterday the deal was “good value for the taxpayer”. “We have struck the right balance, increasing the proportion of shares going to small investors to ensure they get their fair share and ensuring the employees get a 10% stake in the business,” he said.
Shares in Royal Mail begin trading today.
The privatisation is Britain’s biggest since John Major’s Conservative government sold the railways in the 1990s.
The sale of Royal Mail follows the flotation of its Belgian peer bpost in June and comes as strong equity markets have helped revive new listings in Europe this year.
