Vince Cable Unveils Details of Planned Royal Mail IPO

on Jul 10, 2013
Listen

iNVEZZ.com, Wednesday, July 10th: Business Secretary Vince Cable today confirmed that the UK government intends to privatise Royal Mail by means of a London IPO. The sale, expected this financial year, is likely to value the business at between £2 and £3 billion. Cable said that employees would be given 10 percent of the shares in the privatised company for free.

Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins.

**Royal Mail IPO Details Unveiled**
Cable told MPs today that the government would sell Royal Mail through a flotation on the London Stock Exchange. The London IPO has been chosen over selling off the business to a private operator. Royal Mail can trace its roots back to 1516 and the reign of King Henry VIII.

Business Minister Michael Fallon told BBC Radio that the time was now right to “free up” Royal Mail and give it access to private capital which would allow it to grow. He added that the service had been turned around in the last two or three years and it was ready “to be a successful commercial business”.

Reuters quoted Royal Mail Chief Executive Moya Greene as saying that access to external capital was essential for a company still investing in moving its business away from falling letter volumes and toward a growing parcels industry fuelled by internet shopping.
The Financial Times reported that Goldman Sachs, UBS, Barclays and Bank of America Merrill Lynch had been appointed as the lead managers of the London IPO, supported by Investec, Nomura and RBC. The Royal Mail IPO will not affect the Post Office, now a company separate from Royal Mail.

**Opposition to Royal Mail Privatisation**
Cable said that that Royal Mail employees would receive 10 percent of the shares for free if they hold the shares for three years. Royal Mail’s 150,000 UK employees are expected to eventually collect up to £300 million worth of shares. As The Independent has noted in its coverage of the news, the staff involvement is part of the Postal Services Act which paved the way for the sale of the state-owned company two years ago.

!m[Employees to Be Offered Ten Percent of Shares for Free](/uploads/story/3854/thumbs/pic1_inline.png)
The Guardian reported that Cable hoped that the offer of free shares would win over postal workers who are currently opposed to privatisation. The newspaper quoted Billy Hayes, general secretary of the Communication Workers Union (CWU), which represents more than 100,000 Royal Mail employees, as saying that they would not “sell their soul” for a ten percent stake.

“Nobody outside of government and their potential investors wants their postal service sold,” Hayes added. “The public consistently oppose the sale and recently 96 percent of workers voted against.”
The CWU argues that the privatisation will lead to deterioration in postal services. The union has warned that a private postal service might abandon its commitment to a universal service after the general election in 2015, because it would be unprofitable to make deliveries to remote communities.

Ad

Want easy-to-follow crypto, forex & stock trading signals? Make trading simple by copying our team of pro-traders. Consistent results. Sign-up today at Invezz Signals™.

0/10
Learn more
Services Stock Market