Royal Mail shares gain further as formal trading begins

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Royal Mail delivered more strong gains for shareholders this morning as formal trading started on the London Stock Exchange.

Shares gained another 15p, or 3 per cent, making them almost 50 per cent more valuable than the government’s price tag last week.

In the first day of dealing for many of the 690,000 small investors who bought stock in the highest-profile privatisation for years, shares were up to 490p (€5.78) to value Royal Mail at £4.9 billion (€5.78 billion).

Royal Mail’s initial public offering is significantly oversubscribed and many institutional investors that applied for stock will not get any allotment today. Photograph: Paul Thomas/Bloomberg

The UK government seems to have been taken by surprise at the popularity of the Royal Mail offering, which is heavily oversubscribed and is expected to list at the top of its £3 to £3.30 a share band.

That compares with the 330p per share price they were sold for by the Government on Thursday, which valued the group at £3.3 billion.
That means small investors who were allocated shares worth £750 are today sitting on paper profits of more than £360 after the shares rose by 160p.

While shares have been traded informally since Friday when conditional trading began, today is the first day of unconditional dealing in Royal Mail stock.