Royal Mail sell-off: Shared allocated for sovereign wealth funds

Some of the world’s most powerful sovereign wealth funds could receive shares as thousands of British investors are locked out of £3.3billion pay off.

A Royal Mail employee steps out of a delivery van at the Rathbone Place Royal Mail depot in London (Getty Images)

Some of the world’s most powerful sovereign wealth funds could be allocated shares in the Royal Mail worth millions of pounds as thousands of British investors are locked out of the £3.3billion pay off.

State backed entities from Kuwait and Singapore are reportedly among those who have applied for shares worth hundreds of millions of pounds, Sky News has reported.

Shares were initially priced between 260p and 330p, but were raised to 330p by the Government following strong demand.

However, some British private investors are likely to be locked out from the sell-off because they placed orders for more than £10,000 worth of shares.

The Government is expected to give those who placed orders for £750 in shares their full entitlement, but will scale back the amount allocated to those who applied for between £750 and £10,000 worth of shares.

The City based branch of the Gulf state’s investment fund, the Kuwait Investment Office and Government Investment Corporation (GIC) of Singapore are also expected to have their share applications scaled back, but will still receive some shares because ministers are keen for private ownership to have a geographically diverse base, according to Sky News.

The coalition is expected to decide on the “cut-off” point later today. A City stockbroker has said the Royal Mail £3.3billion sell off could have been underpriced by up to 80 per cent.

Canaccord Genuity believe the Royal Mail should be valued at a sum closer to £6billion, or 559p per share, compared to the 330p price per share the Government is expected to charge when trading begins.

Shares will begin full trading on Tuesday.