What to do if you want to take delivery of Royal Mail shares

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Stockbrokers expect a stampede by small investors eager to profit from the privatisation of Royal Mail.

Rebecca O’Keeffe, head of investment at Interactive Investor, one of the 44 companies acting as an intermediary in the public offer, says: ‘Royal Mail does have competition and logistical issues facing it so it is not a foregone conclusion that it will succeed in the long term.’

But she adds: ‘Privatisations are typically priced attractively by governments because they have a desire to create goodwill from retail investors.’

She also points to potentially strong dividend yields – perhaps six per cent or more.

Richard Hunter, head of equities at financial group Hargreaves Lansdown, another of the intermediaries, points to the precedent set by privatised mail organisations in Germany and Austria that have performed well.

Potential shareholders opting to use an intermediary should register soon – as once the offer is under way and the prospectus is published, there are normally between ten and 14 days to apply before shares start trading.

Stockbrokers will not charge for your purchase of the initial shares but check for any subsequent fees for holding or selling them, plus any extra charges for holding them in a tax-efficient Isa or a Self Invested Personal Pension (SIPP).

You can also apply direct to the Government. Register to receive an email alert for the opening of the offer at gov.uk/royalmailshares.
The share price will not be known until the offer has closed and the minimum application is £750 for the public and £500 for eligible Royal Mail employees.

There is no maximum for most applications, except a £10,000 cap if you are purchasing from the Government website using a debit card.

You cannot buy the shares with a credit card. Postal applications require a cheque or banker’s draft.

Although you can make only one application, you can also apply on behalf of children or grandchildren.

If the offer is oversubscribed, allocations will be scaled back. O’Keeffe says: ‘No one knows how this will work. In some offers, those making lower value applications sometimes get their full quota while the bigger amounts are scaled back.’ Some applicants may receive nothing.

Investors who want to shelter their shares in an Isa can do this via intermediaries that offer Isas or transfer the shares into a plan afterwards. Those who want to cash in straight away should consider a share service with low dealing charges, which can start from £10.

Other intermediaries include The Share Centre, TD Direct and Barclays Stockbrokers.

Find more information at gov.uk/royalmailshares.

[UnhappyGremlin]

Stockbrokers expect a stampede by small investors eager to profit from the privatisation of Royal Mail.

Says it all.