Royal Mail's 3.0bn-pound IPO gathers momentum

The government has revealed that the flotation of the Royal Mail will be led by investment banks Goldman Sachs and UBS.

The government has revealed that the flotation of the Royal Mail will be led by investment banks Goldman Sachs and UBS.

Business Minister Michael Fallon said in a statement that the investment banking pair will act as joint global co-ordinators and joint bookrunners, with Barclays and Bank of America Merrill Lynch taking on joint bookrunning duties.

The government has confirmed that a sale of shares in the 497-year-old postal service will take place during the current financial year.

Fallon previously revealed that a decision had not yet been made between an initial public offering (IPO) and a sale of the business.

Now he has reiterated that both options for a sale "remain on the table" but the government is attracted to an IPO as the preferred method of sale, with a value between £2.0bn and £3.0bn mooted.

"It is important that we are in a position to move ahead swiftly with our chosen route once we take the final decision," Fallon said on Wednesday.

"Given the lead time and preparatory work involved in readying an IPO, the appointed banking syndicate will work to make sure we are ready to proceed when the time comes."

In April, Fallon stated "categorically" that the government has "no intention of selling off Royal Mail cheaply".

He said: "We will sell shares in Royal Mail at a fair commercial price that represents value for money for the tax payer".

The company's management, led by Canadian Chief Executive Moya Greene, has also begun to explore access to capital with the debt markets in recent weeks.

Postal worker unions have fiercely opposed a privatisation of the Royal Mail, but the government has sought to dampen this hostility by ensuring at least 10% of the company's shares will be made available to an employee share scheme.

With this likely to be the largest statutory commitment of any major privatisation, a statement stressed that: "People should be in no doubt, whether the shares are discounted, or free, it is a hugely significant commitment from the government to Royal Mail's workers and I am determined to do the right deal for them.

Royal Mail grew revenues nearly threefold last year to £403m, with a 4.0% growth in parcel volumes boosted by the online shopping boom.

OH

Recommended

The top funds to invest in
Funds

The top funds to invest in

Investors continue to favour passive funds in April though figures reveal an actively managed money market fund also caught their eye. We look at wher…
3 May 2023
The ten highest dividend yields in the FTSE 100
Income investing

The ten highest dividend yields in the FTSE 100

Rupert Hargreaves takes a look at the companies with the highest dividend yields in the UK’s blue-chip index
20 Apr 2023
Best junior stocks and shares ISA platforms
Isas

Best junior stocks and shares ISA platforms

A junior stocks and shares ISA is a great way to save for your child tax-efficiently. But it can be confusing deciding which investment platform to ch…
28 Mar 2023
The outlook for Shell shares is mixed, despite bumper profits
Energy stocks

The outlook for Shell shares is mixed, despite bumper profits

With profits surging, it looks as if Shell is on a roll, but the company’s growth from here is hard to see as Rupert Hargreaves explains.
6 Feb 2023

Most Popular

June’s NS&I Premium Bond prize draw - are you this month’s millionaire?
Savings

June’s NS&I Premium Bond prize draw - are you this month’s millionaire?

Two fortunate NS&I Premium Bond winners are now millionaires. Find out here if you’re one of them.
1 Jun 2023
The best one-year fixed savings accounts - June 2023
Savings

The best one-year fixed savings accounts - June 2023

You can now earn 5% on 1 year fixed savings accounts - the best rate seen in 14 years. We have all the latest rates available now.
2 Jun 2023
The top healthcare funds to buy
Investments

The top healthcare funds to buy

Increasingly rapid progress in drugs and healthcare technology makes these trusts top tips, says Max King.
1 Jun 2023