Dumb question regarding investor capital.

[Spedley]

When we float on the stock market, where does the investor capital come from?
Surely the government gets all the money from share sales and share holders won't be investing any money in the actual business (just speculation on it's value).
So where does any investor capital to modernise and make us competitive come from?

[barrowc]

Mainly by borrowing it. Reports are that RM have got £1.4 billion available to them from various banks

[britwrit]

And like others have pointed out, government owned bodies like Network Rail can borrow as much as that at good rates.

[donut]

Just watched the statement on the privatisation by michael fallon in the HOC , Am i missing something here ? his main point of the privatisation was... "to release capital from private investors to allow royal mail to modernise the business" ?? .....Excuse me but WTF have we been doing for the last 3 yrs ?

[Spedley]

I still don't see how a share floatation releases capital for modernisation. Doesn't the few billion generated just top up the governments coffers a few percent? I'm sure RM can get a bank loan no matter who owns it (aren't they keeping a 50% stake for a while anyway?)

[Spedley]

Ok, just checked and a government body isn't allowed to borrow from banks, however ...

BBC
As part of the privatisation, Royal Mail will take on £600m of loans from banks, with another £800m available if necessary. This will replace the loans it currently has from the government.

So RM already owes £600M to the government (presumably for modernisation) and will swap the to the private sector which have limited additionl funds to £800M.

[windermeredave]

excuse me but I`m a bit dumb on this, who will our owners be, who will make the decisions on RM issues? and what sort of time frame are we looking at?. in other words how long before the pain starts?

[RobertT]

excuse me but I`m a bit dumb on this, who will our owners be,

Institutional investors like pension fund managers, the general public and us!

who will make the decisions on RM issues?

The chairman, chief executive, etc just as they do now.

and what sort of time frame are we looking at?. in other words how long before the pain starts?

That's anyone's guess, but a max of 3 years if we're lucky.

[interesting]

Just watched the statement on the privatisation by michael fallon in the HOC , Am i missing something here ? his main point of the privatisation was... "to release capital from private investors to allow royal mail to modernise the business" ?? .....Excuse me but WTF have we been doing for the last 3 yrs ?

Better elastic bands