Royal Mail flotation: minimum investment will be 750 pounds

[TrueBlueTerrier]

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The long-awaited privatisation of the Royal Mail is set to take place “in the coming weeks”, the UK government has revealed.
The shares will be offered to institutional investors and to members of the public, with the government set to offload more than half of its shareholding, though the precise number of shares to be offered has yet to be determined.

What is known is that 10% of Royal Mail’s shares will be made available for free to some 150,000 eligible UK-based Royal Mail employees.

Royal Mail will adopt a dividend policy that supports its aim of generating value for shareholders while ensuring that it retains sufficient capital to invest in growing its business, according to a statement on the government web site http://www.gov.uk/royalmailshares" onclick="window.open(this.href);return false;.
“In the absence of unforeseen circumstances, Royal Mail intends to propose a final dividend only, to be paid in July 2014, of £133 million for its 2014 financial year,” the web site informs; that’s £133mln in total, not a dividend of £133mln per share …

Had it been listed throughout the full financial year, the Royal Mail reckons it would have paid out £200mln in dividends. The intention is for the company to pursue a progressive dividend policy, which is industry jargon for upping the divi each year.
The intention to float off Royal Mail – something even arch-privatiser Margaret Thatcher refused to countenance – was announced to Parliament on 10 July of this year.

Upon listing, all of Royal Mail's existing HM Government provided loans will be refinanced with external debt facilities to be provided by Royal Mail's new banking syndicate.

The minimum application size in the Retail Offer will be £750 for members of the public and £500 for Royal Mail employees eligible under the Employee Priority Offer.

"Our strategy is delivering a revitalised company, with a unique UK, multi-use network through which we are proud to deliver the universal postal service for all UK citizens,” said Moya Greene, chief executive officer of Royal Mail.

Part of that strategy has entailed a massive increase in stamp prices, with the cost of first class stamp going up by an inflation busting 30% from 46p to 60p last year. Greene said at the time that the eye-watering hike was necessary to preserve the Royal Mail’s commitment to what business secretary has Vince Cable called the “one-price-goes-anywhere universal postal service.” The universal service has been in operation in Britain since January 1840.

“This network and our strong brand, coupled with the high service quality delivered by our people enable us to take full advantage of the growth in UK e-commerce to further enhance our pre-eminent parcels business. Combining this UK presence with our pan-European parcels business GLS, should result in a financial profile that combines revenue growth and margin progression to underpin strong cash flow generation," Greene continued.

[mandelsons_toenail]

If it came to it I would consider a 10 year £750 investment


Whether that's sensible or not

[wacko74]

I thought us posties were supposed to be eligible to buy further shares at a preferential rate?

Not seen any further mention of this, only that we can buy buy a minimum of £500 rather than the public minimum of £750... doesn't really make it a preferential rate does it?

[PhilthyPhil]

I thought us posties were supposed to be eligible to buy further shares at a preferential rate?

Not seen any further mention of this, only that we can buy buy a minimum of £500 rather than the public minimum of £750... doesn't really make it a preferential rate does it?

It is not at a preferential rate, just given priority over other investors

The Employee Priority Offer

The Employee Priority Offer is the name for the special arrangements for eligible employees of Royal Mail who wish to apply in the Retail Offer for members of the public. If you are an eligible employee, you can apply for as many Royal Mail shares in the Employee Priority Offer as you wish, and you will pay the same price for the shares as other members of the public.

An eligible employee is a person who (a) was continuously employed by Royal Mail between 10 July 2013 and 12 September 2013, (b) is located in the UK and has a UK address at the time of application, and (c) has UK taxable earnings (or would have UK taxable earnings if they had not had a period of absence).

The minimum application amount for eligible employees will be £500, compared to £750 for other members of the public.

There is no maximum application amount but, in certain circumstances, you will only receive priority on the first £10,000 you apply for. This is known as the priority limit. Any shares applied for in excess of £10,000 will be treated as if it were a separate application in the wider Retail Offer from someone who is not an eligible employee, and you may not receive all (or any) of the shares represented by this excess application amount. The figure of £10,000 may be reduced if the shares allocated with priority to all employees would otherwise use up more than 10% of all the shares sold in the Retail Offer to employees and members of the public. In certain circumstances, the priority limit could be lower than the minimum application amount.

[NWpostie]

Not many people can afford to spare 750 in this recession, low pay and zero hour contracts that's is prevalent at this time.

[PhilthyPhil]

Not many people can afford to spare 750 in this recession, low pay and zero hour contracts that's is prevalent at this time.

I wouldn't expect a very large proportion of the investment to come from private individuals anyway