Royal Mail share price drops as government nets £750m from sale of 15 per cent stake

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The government sold off half its remaining stake in the Royal Mail this morning at 500p per share – half again as much as its original price when it listed in October 2013.

Read more: Lessons learned as final parcel of Royal Mail goes on sale

The offer netted the government £750m, leaving it with a 15 per cent stake in the business – although it sent shares down four per cent to 495.4p, below the offer price, in early trading. 

Last night, the chancellor announced plans to begin the selloff of the remaining stake in the company. During an annual speech at Mansion House in the City, he added that one per cent of the shares on offer would go directly to employees of the service, who already own 10 per cent of shares. 

Royal Mail's IPO in 2013 sparked an inquiry after critics suggested that with an offer price of 330p, then-business secretary Vince Cable had not achieved the best possible value for the taxpayer. However, business secretary Sajid Javid insisted this morning today's selloff had been a success.

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"This sale… represents good value for taxpayers," he said.

"That money can be used to reduce public debt."

“Royal Mail has demonstrated that it can thrive in the private sector. It now has the ability to access the funds it needs to ensure that it has a sustainable future and can adapt to the changes in the postal market.”
 
However, others argue the postal service has experienced a rocky entry into private ownership. Last month it posted annual results showing revenues had risen by an anaemic one per cent to £9.4bn in the year to the end of March, while pre-tax profit fell from £1.6bn to £400m.
 
Chief executive Moya Greene has previously complained that competition in the parcels market has hit volumes. Plans by Amazon to launch its own delivery service caused shares to fall 7.3 per cent in November. 
 
"The growth rate here has been halved in the wake of stiff competition from the likes of TNT, DHL and now Amazon," Greene complained.