Royal Mail sale set for resounding success as demand soars

 

The £3 billion privatisation of Royal Mail looks set for success next week as the banks leading the share offer today pushed the likely price towards the top of the original range.

The investment banks, led by Goldman Sachs and UBS, had set a price range of 260p to 330p per share. Today they narrowed that to 300p to 330p, which would value Royal Mail at £3 billion to £3.3 billion.

Broker Panmure Gordon analyst Gert Zonneveld suggested that, based on the valuations of other publicly listed mail companies, Royal Mail could be worth between £3.7 billion and £4.5 billion. That implies that the shares could shoot up to a sizeable premium when trading starts next Friday.

The share offer was fully subscribed by institutions when it was announced on 27 September.

The retail offer to private investors closes at midnight on Tuesday and retail stockbrokers are gearing up for heavy demand with several opening their offices over this weekend to cope with it.

Richard Hunter, of retail broker Hargreaves Lansdown, which is one of those handling the issue, said: “Although we’re specifically precluded from making any comment on the level of demand, based on past experience, there could be an additional last-minute rush, which is why we are open all weekend to take instructions from clients in case of need.”

Investors appear to be have been undeterred by the Communication Workers Union vote on taking strike action over the privatisation. That vote closes on 16 October with the earliest any strike could be held a week later.

Chris White, head of UK equities at Premier Asset Management, said: “Royal Mail looks like an interesting offer. The company appears to have reasonable prospects over the next few years, especially in its parcels division which will more than offset the declining letters business. The productivity improvements that the company is putting through should help to drive profits forward over the next few years and the issue looks like it has been priced to go.”

Another major institution said:  “We expect the IPO to be oversubscribed because the price range is good, it’s an attractive business with growth potential and the management has impressed us.” 

Royal Mail, led by Moya Greene, pictured, could lose the rights to use symbols of the monarchy although the use of the Queen’s head is guaranteed for her lifetime, the sale prospectus revealed. The Royal cipher on post boxes and the crown on stamps could be removed under certain circumstances including if the firm ceases to provide a universal post service.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

The 161-page dossier that exposes Fifa's dark heart

How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

Exclusive interview with Tripoli PM Khalifa al-Ghweil

'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

Raymond Chandler's Los Angeles

How the author foretold the Californian water crisis
Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

Art attack

Chinese artist who posted funny image of President Xi Jinping facing five years in prison
Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

Cher is the new face of Marc Jacobs

Alexander Fury explains why designers are turning to august stars to front their lines
Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

'I'm climbing Ben Nevis for my daughter'

Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
10 best wedding gift ideas

It's that time of year again... 10 best wedding gift ideas

Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
Paul Scholes column: With the Premier League over for another year, here are my end of season awards

Paul Scholes column

With the Premier League over for another year, here are my end of season awards
Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

Liverpool have seen too much tragedy to forget Heysel

Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

Khan’s audition for Mayweather may turn into a no-win situation

The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor