11th October 2013
Royal Mail shares have soared by 38% to 456p since they started trading today.
In what has been the most the most high profile UK privatisation in decades, demand for the stock has far outweighed supply. The shares starting price was 330p, valuing the business at £3.3bn.
Royal Mail does not officially list on the market until Tuesday but private investors can trade through some brokers.
Yesterday the Department for Business, Innovation and Skills confirmed that all members of the public who submitted a valid application for £750 worth of shares – more than 93,000 people – will have their application met in full.
In total more than 270,000 applicants, will receive at least half of the Shares they have applied for. Approximately 5 per cent of applicants will receive no allocation.
Over 99 per cent of Royal Mail’s approximately 150,000 UK-based eligible employees will between them receive a total allocation of just over 100 million free shares, representing 10 per cent of Royal Mail’s share capital.
However the general secretary of the Communication Workers Union, Billy Hayes, described the sell-off as “a tragedy” and predicted that it would make “not one scintilla of difference” to employees’ intention to vote for strike action next Wednesday.
Mr Hayes told the BBC: “This is a sham, really. The company has been under-valued.
“It’s basically David Cameron rewarding his mates in the City. Vince Cable, one of the cleverest men in British politics, has made one of the stupidest decisions he is ever likely to make as a politician.”
Stuart Welch, CEO of brokers TD Direct Investing says: “Despite record levels of demand, it is encouraging to see that smaller DIY investors will have a stake in the ownership of this well-known brand, with 95% of retail investors that applied receiving £750 of shares. Conversely, the City banks, hedge funds and other institutional investors will get about 70 per cent of the shares being sold, so many of them that applied for stock at a lower price may not get any allotment at all.”