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Royal Mail Shares Make Strong Debut

posted 11 Oct 2013, 08:20 by Mpelembe Admin   [ updated 11 Oct 2013, 08:21 ]
Reuters Business  Report - 450 pence is today's daily digit - that's the price shares in Britain's Royal Mail were trading at as they made their market debut.

That's 36 percent higher than what investors paid in the privatisation sale - and it's fuelling debate over whether the government got the price right.

David Jones is a market strategist at IG.

 IG CHIEF MARKET STRATEGIST DAVID JONES:

"I think it ended up starting much higher than even maybe the most positive amongst us expected. So that argument is still going to carry on I think. When you've got it jumping at a 30 percent premium to the offer price, it does look like it got away a little bit on the cheap."

Nonetheless the government says it hasn't undervalued the 500-year-old company.

Analysts will be watching closely to see how the share price moves, ahead of next week's official listing on the stock exchange.

IG CHIEF MARKET STRATEGIST DAVID JONES:

"We need to give it time to settle. In a week's time let's see where it's trading and whether it's got the same valuation."

It's one of the biggest privatisations Britain has seen in decades - and shares available to private investors were seven times oversubscribed.

But not everyone was in favour of the sale.

The CWU, the trade union representing postal workers protested outside the London Stock Exchange.

They believe they still have time to stop it going ahead.

GENERAL SECRETARY OF THE COMMUNICATION WORKERS UNIONBILLY HAYES:

"We're going to be campaigning to make sure Royal Mail is put back in public ownership as quickly as possible. This is an outrage. Nobody supports the privatisation of Royal Mail and what you've got over there in that building - the Stock Exchange, is people who want to make money and not make a great postal service, and that's outrageous."

Workers will vote next week on whether or not to strike.

Whether or not they do, the privatisation attempted by three different governments over the last 19 years, looks set this time to go ahead.


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