Royal Mail Shares Up By 36% As Trading Begins

Royal Mail Shares Soar On Early Trading

Royal Mail shares have risen 36% to 450p at the start of conditional dealings on the London Stock Exchange.

The rise in share price, which started off trading at 330p on Friday morning, means the 690,000 ordinary investors who have each bought around £750-worth of stock gained more than £270 each.

The government announced on Thursday that 95% of all applicants for the heavily-oversubscribed offer had picked up stock.

Shares were sold at the top end of the price range set by the government, valuing the company at £3.3 billion, but a rise to 450p implies an increase to £4.5 billion.

The surging price is likely to renew claims that ministers have sold off public assets too cheaply. The privatisation of a 52.2% stake in Royal Mail has initially raised £1.72 billion for the Treasury.

Last night the Government said that all retail investors who applied for between the £750 minimum allocation and £10,000-worth would receive a tranche of 227 shares worth £749.10.

But many hoping for a bigger slice of the company were left disappointed after retail investors who applied for more than £10,000-worth got none after the offer was seven times oversubscribed.

A third of the sold-off stake - excluding a 10% chunk being given free to 150,000 Royal Mail staff - has been allocated to the general public.

The remainder has gone to big institutional investors such as pension funds, insurers and hedge funds. The institutional offer was more than 20 times over-subscribed.

Taxpayers have been left with a 37.8% stake in the company, although this could be reduced to 30% depending on a so-called "over-allotment" option, which is dependent on price performance following the flotation.

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