UK government completes privatisation of Royal Mail

The government has sold its final stake in British postal service company Royal mail at GBP4.55 per share, to raise GBP591m, it was reported on Tuesday.

Privatisation of Royal Mail was initiated in December 2013 and has now been completed with the sale of the government’s 13% stake in the business and a 1% stake awarded to Royal Mail employees.

Shares were sold in a process known as an “accelerated book build” to institutional investors only, with retail investors unable to buy stock. But around 143,000 Royal Mail staff will benefit from the 1% share gift, gaining 70 shares each at a value of approximately GBP318. As with previous share awards, Royal Mail staff will have to wait three years before they can cash their shares in. The employees of 500 year old postal service are now said to own around 12% 0f the company.

Royal Mail was floated at GBP3.30 per share and early this year the share stood at GBP5.26. Since January the share price has reportedly dropped to close at GBP4.712, as of 12 October 2015. In total, the government has received GBP3.3bn from the sale of Royal Mail shares to private investors, however a report commissioned by the then Business Secretary, Vince Cable, found that the initial sale was GBP180m less than could have been achieved. According to the report, high level of demand from banks and individuals meant that the shares could have been valued up to GBP0.30 more than the flotation price.

Commenting on the latest sale of Royal Mail shares, Business Secretary Sajid Javid said it was “a truly historic day for Royal Mail”.

Javid added “We have delivered on our promise to sell the government’s entire remaining stake, which means that for the very first time, the company is now wholly owned by its employees and private investors.”

Proceeds from the sale will be used by the government to pay down the UK’s┬ánational debt.