Biggest privatisation in decades as Royal Mail float expected to raise £2.8-2.9bn in coming weeks
The government has confirmed that it will now sell off Royal Mail "in coming weeks" as unions prepare strike action over what will be the biggest privatisation in decades.
When offered to private hands on the London Stock Exchange, Royal Mail could go for as much as £3bn according to estimates. ETX Capital's spread suggests a floatation would see the postie valued at £2.8 to £2.9bn.
ETX Capital's head of trading Joe Rundle says that borrowing facilities of £1.4bn from a syndicate of banks have been secured.
The Government intends to dispose of a majority of the existing ordinary shares, taking into account the shares sold and the 10% of Royal Mail to be made available for free to around 150,000 eligible UK-based Royal Mail employees under an employee free shares offer at the time listing.
The Government will retain flexibility around the size of the stake to be sold, as this will be influenced by market conditions at the time of the transaction, investor demand and the objective to ensure that value for money for the taxpayer is achieved.
Morning Wire editor Allister Heath:
Predictably, union leaders oppose the sale, even though workers will be given an extraordinarily generous 10 per cent stake in the firm. The rest of us should support the privatisation, an excellent if belated idea: it is the only way Royal Mail can cash in on the home delivery boom, raise funds to invest in technology and fight back against its ultra-aggressive private competitors. We need private posties, and we need them now.