Royal Mail shares priced at 330 pence in oversubscribed sale
By Sarah Young and William James
LONDON (Reuters) - Britain sold a majority stake in Royal Mail at 330 pence a share on Thursday following massive investor interest that values the postal service company, known worldwide for its iconic red postboxes, at 3.3 billion pounds ($5.3 billion).
In one of Britain's biggest privatizations for decades, Royal Mail (RMG.L: Quote) priced its London listing at the top of a 260 pence to 330 pence range in a sell-off which could flush around 2 billion pounds into government coffers.
But the sale has been criticized by the opposition Labour party as under-pricing the firm and short-changing taxpayers.
Royal Mail's public offering leaves the government with a 38 percent stake, it said on Thursday, but this could fall to 30 percent should it choose to exercise an over-allotment option.
The government made 33 percent of shares available to the public, more than the 30 percent allocation that had been had expected, after the sale was oversubscribed seven times. That left institutional investors, whose offer tranche was over 20 times oversubscribed, with 67 percent of the offering.
Business Secretary Vince Cable on Thursday denied claims that the firm had been sold off on the cheap.
"There's no question of it being undervalued, we worked for a very long period of time to establish the true value for serious long-term investors," he said, adding that he thought the government had struck the right balance by favoring small investors.
Royal Mail's flotation, which has gone ahead despite the threat of strike action and criticism from Labour, follows three earlier attempts by different governments to privatize the business that has been in state hands for almost 500 years. Continued...