Royal Mail Shares open at 450p
The float of Royal Mail has got off to a right royal start with the shares opening at 450p or around a 35% premium with the IPO 20 X oversubscribed by institutions and 7 x by private investors. The pricing and float have been subject to the anticipated criticism from the unions and opposition parties.11 October 2013
At face value the IPO launch has been a stellar success, but the price in coming months will likely not be sustained when the pre sale hype dies down. Small investors will offload shares to institutions looking to pick up another utility play. The 20 X oversubscription figure flatters the float as many will have applied for far more shares than they intended to hold, as it became clear that share allocations would be cut back due to demand.
The UK government got this one right. Time will demonstrate they got fair value for the asset at £3.3bn, and delivered a good deal for the small investor with most of the shares ending up in the hands of big pension and insurance companies. This will convert a passive state asset into a significant boost for the savings and retirement plans of millions of ordinary working people.