Coalition Seeks To Deliver Posties' Share Plan
The Government is accelerating plans to privatise Royal Mail by canvassing external advisers to run a share scheme that will give the postal operator's 145,000 employees a stake in the company.
I have learnt that ministers at the Department for Business, Innovation and Skills (BIS) last week launched a tender process to recruit an administrator for the staff share ownership programme, heralding what will be the largest privatisation for 30 years.
Advisers are expected to be appointed in the coming weeks. The chosen party will be responsible for overseeing the placement of at least 10% of Royal Mail's shares in the hands of its staff, fulfilling a commitment made by the Government as part of its plan to inject private capital into the company.
The adviser will also oversee the necessary back-office infrastructure to supervise the scheme, insiders said.
Sky News revealed last month that Michael Fallon, the Business Minister overseeing the privatisation plans, has asked officials to devise an employee equity scheme designed to avoid the process of 'stagging', which blighted the huge privatisations of the 1980s under Margaret Thatcher. Stagging is the term given to those who buy or receive shares at the offer price of a flotation and then sell them immediately into the market.
It is unclear how long Royal Mail employees would be obliged to hold onto their shares but experts say it would be likely to be for a period of several months at least.
Officials pointed out that by setting a floor for employee share ownership of 10%, they were preparing for the largest statutory commitment to staff participation of any UK Government privatisation.
The sell-off plan, which would be the largest since BT was privatised in 1984, could take the form of a sale to a single buyer or, more likely, a stock market listing that would place Royal Mail on the cusp of the FTSE-100.
Under the Postal Services Act passed in 2011, the Government cannot sell a single share in Royal Mail until it has made provisions for workers to own a stake in the company.
A team of officials from BIS and the Shareholder Executive, which oversees the management of state-owned companies, is working for Mr Fallon on the employee share offering.
The plans are not yet finalised but senior Government sources confirmed that an 'anti-stagging' clause was likely to be included in the scheme to avoid the prospect of millions of pounds-worth of additional shares being dumped in the market as soon as the listing takes place.
Under Moya Greene, Royal Mail's Canadian chief executive, the company has been discussing the company's prospects with potential investors in the UK, Canada and the US as it tries to familiarise fund managers with its financial performance.
Ms Greene, who joined about two years ago, has been cutting thousands of jobs as part of a move to automate many of Royal Mail's processes and modernise the company. Her actions have caused some tensions with trade unions, but their hostility to a privatisation process appears to have eased in the context of previous efforts.
The company's efforts have begun to pay off, with operating profit increasing from £12m to £144m in the six months to September 2012, on the back of a surge in demand for sending parcels as consumers switch their buying habits to online retailers.
A BIS spokesman declined to comment.