Royal Mail IPO could be over-subscribed

[TrueBlueTerrier]

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Nearly half of investors plan to take up the Royal Mail initial public offering (IPO).

According to a survey by SharePrice, a subsidiary of online platform Interactive Investor, 46 per cent of investors are interested in subscribing to the new share issue.

Just 11 per cent are looking for long-term income gains, and 13 per cent for growth. Conversely, 20 per cent said they were looking to make a short-term gain from taking part in the share issue.

Tim Huckle, chief technology officer at SharePrice, says this type of purchase, known as ‘stagging’, was commonplace in previous government privatisations and can be a ‘relatively profitable practice’.

Although a third of the 17,000 people surveyed said they were not interested in the IPO, and a further one in five said they did not like privatisations, Huckle thinks the offer may be oversubscribed. ‘With this level of interest the Royal Mail is likely to create a new generation of privatisation investors,’ he says.

‘However, the sting is in the tail, with nearly half of those who express an interest confirming their intention is to sell out quickly if the price rises in the after market,’ adds Huckle.

Tim Archer, head of operations at Redmayne Bentley, one of the participating intermediaries for the offer, says it has already seen a great amount of interest in the issue. 'We believe investors are likely to be focused on the dividend policy as stated by Royal Mail and the yield that it implies for the shares at the offer price range,' he adds.

[trythat]

I bet they didn't ask many OPG!