Royal Mail float: 40,000 wealthy investors miss out as shares are valued at 330p - and all other private buyers get minimum £750 allocation

Documents revealed that those requesting between £750 and £10,000 will each receive a flat 227 shares worth £749.10

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The Independent Online

Nearly 40,000 wealthy private investors desperate for Royal Mail shares were told they would receive none tonight as the Government limited the offer to only those who requested fewer than £10,000 worth.

Documents released this evening revealed that those requesting between the minimum of £750 and £10,000 will each receive a flat 227 shares, which will be worth £749.10.

Business secretary Vince Cable was faced with a dilemma about how to allocate the shares fairly after a frenzy of applications massively outnumbered the amount of shares being offered. For each share being made available to the public, there were seven applications.

Demand was so high after City analysts suggested the shares were being set at a price that undervalued the Royal Mail by at least £1bn, giving rise to protests that the government was selling the taxpayer-owned postal service too cheaply.

The government set the sale price at 330p a share – at the very top end of the indicated range.

Retail investors will receive a third of the shares, with the rest going to big international pension funds and other investors. Foreign sovereign wealth funds in the Middle East are believed to be among those who have been awarded shares.

The Royal Mail’s 150,000 UK staff are to get 100m free shares.

The Government said the decision to give no shares at all to those retail investors seeking the biggest number was in line with previous state privatisations.

Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers said: “It is unusual to exclude some applicants altogether; there would normally be a scaling back. This will be a great disappointment to those who have missed out.”

Based on the offer price, the Royal Mail is being sold for £3.3bn, although the government will retain nearly 38% of the business.

The institutional element of the share offer was more than 20 times subscribed, meaning there were 20 offers for each share being sold.

::More than 690,000 people applied for shares

::93,000 will get their application for £750-worth in full

::more than 270,000 will get at least half what they asked for

::34,500 will get nothing