Royal Mail Staff 'Will Have To Keep Shares'
Tens of thousands of Royal Mail staff could be forced to hold onto shares in the company for months after a potential stock market listing as Government ministers attempt to avoid an instant mass share sale.
I have learnt that the scheme is being drawn up by the Government to try 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.
Under plans enshrined in legislation passed last year, the Government is to hand Royal Mail staff a 10 per cent stake in the company as part of a project to inject private capital. That 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.
A team of officials from the Department for Business, Innovation and Skills (BIS) and the Shareholder Executive, which oversees the management of state-owned companies, is working 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. It is unclear exactly how long staff would be asked to hold onto their share awards.
The process to privatise Royal Mail, which has eluded previous secretaries of state including Lord Mandelson, is being overseen by Michael Fallon, the business minister.
Mr Fallon told the Financial Times earlier this week that the conditions were ripening for an injection of external capital into the company.
"You have got a business that is profitable, doesn't have a pension deficit, will be operating in a clear regulatory environment and would no longer be competing with schools and hospitals for scarce capital," he told the newspaper.
Under Moya Greene, its Canadian chief executive, Royal Mail's management team 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 tens of thousands of jobs as part of a plan 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.