Royal Mail Shares: Thousands Miss Out
Thousands of UK taxpayers will miss out on the biggest privatisation in a generation after the Government confirmed the sale of nearly £2bn of shares in Royal Mail.
Ministers confirmed after the UK stock market closed on Thursday that they would price the postal operator's stock at 330p-a-share, giving it a market value of £3.3bn.
The price was at the top of an indicative range, fuelled by massive demand from private and institutional investors who placed orders for approximately £45bn-worth of shares.
The Government said every private investor who applied for the minimum £750 investment would receive that amount, but anyone who applied for more than £10,000 of shares would receive none.
In all, 270,000 will get at least half of the shares they applied for, it said.
Demand from private investors was seven times over-subscribed, with Vince Cable, the Business Secretary, saying there had been 700,000 applications.
The share sale - which has been bitterly opposed by trade unions as well as Labour politicians, who have accused the Coalition of undervaluing Royal Mail - will raise at least £1.72bn, and potentially as much as £1.98bn if an option to sell a further 8% of the company is exercised.
Insiders said that that was almost certain to happen once Royal Mail shares begin unconditional trading next week.
The decision to exclude thousands of private investors is likely to be controversial, particularly as the Government has, as Sky News revealed on Thursday, allocated millions of pounds of shares to state funds from Kuwait and Singapore.
Around 150,000 Royal Mail staff will each get about £2,200 of free shares.
Mr Cable said the privatisation would not deflect the Government from its pledge to protect consumers and that it had delivered "good value for money for the taxpayer".
The sale would deliver "a stable long-term ownership structure that will enable Royal Mail to be a successful enterprise and to raise commercial funding to invest", he added.
The 501-year-old institution hopes the money from the privatisation will allow it to secure its long-term future in an increasingly competitive delivery market.
Conditional trading of shares will begin on Friday, when institutional investors are allowed to trade with one another, with full trading getting under way next Tuesday, the day before the result of a strike ballot by postal workers.
Members of the Communication Workers Union are expected to back industrial action over issues linked to pay and conditions, with any strike set to be held on or after October 23 - the start of the run-up to the busy Christmas period.