Royal Mail flotation: Key questions as excitement builds over 'undervalued' shares

When is the earliest private investors can sell their shares?

It is now just a week until Royal Mail shares begin official trading in the biggest Government flotation for two decades.

But as excitement builds around the privatisation, there are questions over whether all the applicants will receive shares, the exact price of the stock and how the launch of the initial public offering will work.

When will investors know the final price for shares?

Shares were initially priced at between 260p and 330p, but the guidance has since been revised to between 300p and 330p, which would value Royal Mail at around £3.3 billion.

The final price will be announced on Friday, when "conditional share dealing" begins.

Spread betting firm IG Index said the so-called pre-flotation "grey market" is seeing investors bet that the share price will start at 403p.

What does conditional share dealing mean?

After the offer closes at midnight today and once the offer price has been confirmed, shares can be unofficially traded by institutional investors - who will own around 70 per cent of shares under the offer.

This is known as conditional trading, when City institutions can buy and sell shares between each other. This period allows shares to settle at the right level before official trading starts.

When will shares start open trading?

Full trading will begin next Tuesday, October 15, when all investors can buy and sell shares in Royal Mail.

So when does the flotation kick off?

The flotation effectively launches with conditional dealing on Friday and this is the day when it will be clear if the Government has under-valued the privatisation.

IG Index expects the closing price of shares will be between 392p and 412p by the end of the first day of conditional dealing.

When will investors know how many shares they have been allocated?

This will depend on how investors applied for the shares. Those that applied through one of the more than 60 authorised brokers acting as intermediaries for the flotation may find out on Friday how many shares they have been allocated, although it depends on the individual broker.

Those who applied direct through the Government's Royal Mail share offer website will find out next Tuesday, or within two days of full trading at the latest, while those that applied through the post will have their share allocations confirmed by letter, which will be sent out on Tuesday and arrive within a week.

What if the shares are over-subscribed?

It is expected that there has been a tremendous amount of demand from retail and institutional shareholders for the flotation, which may mean investors do not receive all of the shares they applied for.

The Government has not announced what it will do if shares are over-subscribed, although Business Minister Michael Fallon sought to assure he was "committed to making sure smaller investors get their fair share".

Up to 62 per cent of the business will be sold, with the rest remaining state-owned. But the Government has already said it may sell another 15 per cent of its stake if demand for the shares is very high in what is called an "over-allotment" option.

The total amount of the business being sold will be decided after the share offer closes.

When is the earliest private investors can sell their shares?

General investors will be able to trade their shares from October 15. But those that applied for shares through brokers offering conditional dealing will be able to trade from Friday.

Royal Mail employees who are given shares for free will be unable to sell those shares for three years.

How can investors sell their shares and how much will it cost?

Investors who buy shares through brokers can sell them using those intermediaries, for a fixed fee as low as £5.95.

Those who have bought direct through the official website or by post can sell online or by phone. If dealing by phone, they will have to pay a 1% commission charge set at a minimum of £25. The commission charge is also 1% for selling online, but with a minimum of £17.50.

But there will be a temporary telephone and postal dealing service that allows investors to sell shares, with a commission charge of 0.75 per cent of the value of the transaction, set at a minimum of £7.50.

Investors who have applied to receive hard copies of their share certificates will pay even higher fees through a firm called Equiniti, which handles share dealing and issues share certificates.

It charges 1.5 per cent of the value of share certificates, at a minimum of £45, for conducting the sale if a certificate has been issued. There is also a £42 replacement charge for lost certificates.

But shares bought direct through the Government can be transferred to another broker account at a later date, at a cost of £10.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Life and Style
Suited and booted in the Lanvin show at the Paris menswear collections
fashionParis Fashion Week
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
News
An asteroid is set to pass so close to Earth it will be visible with binoculars
news
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
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 General

Austen Lloyd: Private Client Solicitor - Oxford

Excellent Salary : Austen Lloyd: OXFORD - REGIONAL FIRM - An excellent opportu...

Austen Lloyd: Clinical Negligence Associate / Partner - Bristol

Super Package: Austen Lloyd: BRISTOL - SENIOR CLINICAL NEGLIGENCE - An outstan...

Recruitment Genius: Sales Consultant - Solar Energy - OTE £50,000

£15000 - £50000 per annum: Recruitment Genius: Fantastic opportunities are ava...

Recruitment Genius: Compute Engineer

Negotiable: Recruitment Genius: A Compute Engineer is required to join a globa...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project