Royal Mail sale to begin in the next few weeks

The government has confirmed it will sell shares in Royal Mail on the London Stock Exchange in the next few weeks.

The Department for Business, Innovation and Skills (BIS) said it intends to sell the majority of its share in the post and parcel operator, but the size of the stake will depend on market conditions at the time of floatation, investor interest and value for money for taxpayers.

The initial public offering will comprise a retail offer in the UK. This will be priced at a minimum entry spend for a basket of shares of £750 for members of the public, and £500 for employees not eligible under Royal Mail’s free shares scheme.

In addition, a separate employee free shares offer will be made available to 150,000 staff.

Institutional investors outside the UK will also be able to buy shares, excluding those in the United States.

Royal Mail chief executive Moya Greene said: “Our strategy is delivering a revitalised company, with a unique UK, multi-use network through which we are proud to deliver the universal postal service for all UK citizens.”

New challenges

Petar Cvetkovic, CEO at  DX Group, which last month revealed a new livery for Nightfreight,  said privatisation would present Royal Mail with new challenges.

“It walks the fine line between being a private and a public company- this must be monitored and controlled to ensure that both consumers and businesses are treated fairly and can maintain access to the entire network," he said.

“It’s important that we retain our wholesale access in order to continue delivering and competing in this marketplace,” Cvetkovic added.

BIS also revealed that Royal Mail’s group unaudited Q1 turnover to 30 June 2013 grew to £2.3bn, up 3% on the previous year.

Royal Mail believes that Communication Workers Union members will vote for national industrial action later this month and has put contingency plans in place.