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UK's Royal Mail IPO set to deliver

Thursday, October 10, 2013 - 01:37

Oct 10 - Britain's biggest privatisation in decades has captured the imagination of the public, with 700,000 individuals applying for seven times the number of Royal Mail shares on offer to private investors. Joanna Partridge asks if that's because the world's oldest postal service is being sold off too cheaply?

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Motoring towards the stock exchange. The privatisation of Royal Mail - Britain's biggest in decades - has grabbed the public's attention. Business Secretary Vince Cable told a parliamentary committee the shares available to private investors were seven times oversubscribed. SOUNDBITE: Vince Cable, Britain's Business Secretary, saying (English): "We've had about 700,000 applications." The opposition Labour party has accused the government of pricing the sale too low - 330 pence a share. That's the top end of the government's target price range and values the firm at £3.3 billion. Robert Cole from Reuters Breaking Views says the pricing is right. SOUNDBITE: Robert Cole, Reuters Breaking Views, saying (English): "The demand for these shares has been really quite unbelievable, and I use that word advisedly. It is to my mind unbelievable. And I think it raises the question that some people could lose some money here." The government is selling 52% of the company. It's handing 10% of shares to postal service workers, alongside institutional and private investors. Only 368 of the 150,000 eligible employees declined their free shares, which are worth around £2,200 each. Even those who don't agree with privatisation are getting them. SOUNDBITE: Greg Charles, Royal Mail employee, saying (English): "I'll keep the shares. It would be foolish of me to opt out of something that in the long term can pay some dividends to me." SOUNDBITE: Dominic Beck, Royal Mail employee, saying (English): "It's not a case of accepting them, the government have put them on the table, they're there." Although the sale went well, the Royal Mail could face a rocky ride following its Friday debut. The threat of a strike is still hanging over the firm - and trade unions are currently balloting delivery workers.

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UK's Royal Mail IPO set to deliver

Thursday, October 10, 2013 - 01:37