The government has started the sale of half its 30 per cent stake in Royal Mail as announced by the government seven days ago, but there’s a catch: only institutional investors, such as pension funds, are eligible to buy them.
A note from the Department of Business, Innovation and Skills said that the sale of half the government’s shares, comprising 15 per cent of the value of Royal Mail, has been authorised. Once these have been placed, there will be a three month wait until more shares are sold.
The note does not say whether the remaining 15 per cent stake will be available to ordinary people - known as retail investors.
The government is hoping to raise £1.5 billion from the sale to put towards reducing the deficit.
The sale starts the final part of the privatisation of Royal Mail, which began with an initial public offering of shares in October 2013. Employees now hold 10 per cent of the shares already sold off, while the remaining 70 per cent is held by private investors.
The government may be seeking to avoid repeating the problems of the 2013 sell-off, in which shares were initially sold for 330p a piece, at the very top end of what was expected.
That valuation came under huge scrutiny after the share price rocketed from the first day the shares began trading, prompting fears that the government had undervalued the company.
Royal Mail shares peaked over 600p in the aftermath and now trade around 516p.Reuse content