British Royal Mail Valued at $5.3 Billion Prior To IPO

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While the Royal Mail’s roots date back to the court of Henry VIII in the 16th century, its real success arrived nearly 400 years later with the advent of Internet shopping. The English, Welsh, Scottish, and Northern Irish have taken to online ordering and delivery as much as any country. While the USPS is a bankrupt dinosaur, the Royal Mail has been valued at $5.3 billion prior to a share sale that will take place next month.

Royal Mail’s IPO

The British government recently announced that shares would be priced at £2.60, or $4.20, to £3.30, valuing the group at £2.6 billion to £3.3 billion. The shares are to start trading in London on Oct. 11.

‘‘This will give Royal Mail access to the private capital it needs to modernize,’’ Vince Cable, the business secretary, said in a statement on Friday. ‘‘We are encouraged by the interest shown by potential investors so far.’’

The IPO will be the second largest in Britain’s history of privatization and the largest since British Rail went public in the 1990s.

Royal Mail employees eligible for free shares

In a very British turn, around 150,000 Royal Mail employees will be eligible for free shares accounting for ten percent of one of Britain’s largest employers. The British government will also hold on to somewhere between 37.8 percent and 49.9 percent of the company. This partial sale as been a talking point in Parliament for over a decade though the debate has been shelved on numerous occasions due to opposition from the Communication Workers Union.

As part of the sale, Royal Mail employees are to receive shares worth 10 percent of the company, which is among Britain’s largest employers, for free. About 150,000 Royal Mail staff members will be eligible for free shares, the government said.

Said union, which represents the majority of the Royal Mail staff, is presently sending out ballots for workers to decide whether or not to go on strike before and/or after the sale.

Billy Hayes on Royal Mail’s privatization

‘‘Royal Mail is profitable and can continue to be successful in the public sector,’’ Billy Hayes, the union’s general secretary, said in a statement. ‘‘The sale is driven by political dogma, not economic necessity.’’ The results on the vote are due on Oct. 16 and the earliest a strike could take place is Oct. 23, he said.

Moya Greene, chief executive of Royal Mail, suggested today that this is precisely what the Royal Mail needs to  ‘‘compete in what is a fast changing and intensely competitive market.’’

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About the Author

Brendan Byrne
While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala. To contact Brendan or give him an exclusive, please contact him at [email protected]

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