LONDON--Shares of newly privatized U.K. postal service Royal
Mail PLC rose early Tuesday on their first day of trading for all
investors, after soaring last week amid trading by institutional
investors and those who purchased their shares through brokers.
Royal Mail shares were up 2% at 484.5 pence midmorning on the
London Stock Exchange. Last Friday, shares soared 38% on their
first day of so-called conditional trading--limited to
institutional shareholders and those who bought through brokerages.
Over the last three days of trading, shares are now up about 47%
from the government's original offer price of 330 pence.
Tuesday is the first day that all private investors have been
able to trade.
The stock "has picked up where it has left off. There is good
momentum," said Panmure Gordon analyst Gert Zonneveld.
The government previously indicated the shares would be priced
between 260 pence and 330 pence a share, valuing Royal Mail at
GBP2.6 billion to GBP3.3 billion ($4.15 billion to $5.27 billion).
Institutional investors took up two-thirds of the offer, with the
rest going to retail investors, the government's Department for
Business Innovation & Skills has said.
The public offering creates the largest employee share plan of
any British privatization for almost 30 years, with about 150,000
Royal Mail employees eligible to get free shares. In total,
employees could hold a combined 10% stake in the company.
The initial public offering of a 52% stake in the
postal-services group is part of the U.K. coalition government's
plan to sell off state assets to help cut the country's budget
deficit. Union representatives, many of whose members work for
Royal Mail, and opposition politicians have criticized the
government's handling of the sale.
The U.K. government has defended the sales process against
accusations it set the initial price too low, saying a settled
share price over time is what matters. The rise of the Internet and
email has shrunk Royal Mail's postal deliveries, leading to losses
in five of the past 12 years and the elimination of more than
50,000 jobs.
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