Royal Mail Sale: Thursday Delivery Target
Some of the City's most prominent fund managers are lining up to back the £3bn privatisation of Royal Mail as ministers target Thursday morning to press the button on the historic sell-off.
Sky News understands that Lansdowne Partners and Standard Life Investments are among the City institutions which have provided positive indications of their appetite to invest in the company despite the looming threat of the first national strike by Royal Mail staff since 2009.
The pair is among scores of prospective investors with which the postal operator's executives and advisers have held discussions in recent months as the Government attempted to build enthusiasm for the initial public offering.
Investment bankers involved in the deal say they are surprised at the extent of the positive reaction to their initial soundings with investors, although the actual demand for shares will depend to a large extent on how they are priced.
Ministers are likely to take a final decision on Wednesday evening to press ahead with the privatisation, which will take place through a stock market flotation in London next month. A statement formally known as an Intention To Float announcement is expected at 7am on Thursday.
A spokeswoman for the Department of Business, Innovation and Skills insisted on Monday that no final decision had been taken about the timing of a deal. Other external factors such as the crisis in Syria and an impending announcement about the sale of part of the Government's stake in Lloyds Banking Group could yet alter the Royal Mail timetable, insiders said.
However, ministers have made it clear that they will not allow the Royal Mail privatisation to be distracted by the robust stance of trade unions.
Sky News revealed last week that Royal Mail would commit to a generous dividend policy in order to entice investors to back the flotation, with a commitment to a specific shareholder payout for the current financial year, as well as a general intention to distribute up to about 50% of its profits in the form of dividends in subsequent years.
"This will be an income stock for investors despite the continuing decline in the company's core letters business," said one person close to the group.
Royal Mail's board is understood to have backed the dividend pledge in principle and will meet on Wednesday to agree further details relating to the privatisation.
Postal operators in other European markets tend to pay out at least 40% of their earnings in dividends although Royal Mail would be expected to retain a large chunk of its future profits as it continues to invest in the modernisation of the company.
The company's flotation will include an eventual distribution of 10% of Royal Mail shares to 150,000 of its employees and an offer of shares to ordinary retail investors.
Royal Mail declined to comment on Monday.