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| Royal Mail shares: thousands fail in applications for larger stake | Royal Mail shares: thousands fail in applications for larger stake |
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| Anyone who applied for more than £10,000 of Royal Mail shares – an estimated 36,500 individuals – will be left empty handed after the government chose to favour small investors over those who regularly play the stock market. | Anyone who applied for more than £10,000 of Royal Mail shares – an estimated 36,500 individuals – will be left empty handed after the government chose to favour small investors over those who regularly play the stock market. |
| In one of the most sought-after privatisations since the 1980s sell-off of state assets, Vince Cable, the business secretary, said that everyone who applied for less than £10,000 of shares would receive shares worth £749.10. | In one of the most sought-after privatisations since the 1980s sell-off of state assets, Vince Cable, the business secretary, said that everyone who applied for less than £10,000 of shares would receive shares worth £749.10. |
| But the government decided that those who applied for more than £10,000 would get no shares at all, blocking big private investors, after being overwhelmed with applications for more than seven times the number of shares available. | But the government decided that those who applied for more than £10,000 would get no shares at all, blocking big private investors, after being overwhelmed with applications for more than seven times the number of shares available. |
| David Cameron tweeted: "I'm glad every small investor will get their #RoyalMail shares – their investment will help deliver a 1st class service." | David Cameron tweeted: "I'm glad every small investor will get their #RoyalMail shares – their investment will help deliver a 1st class service." |
| The government will collect between £1.7bn and £2bn from the sale, depending on exactly how many shares it sellson Friday. It is selling between 52% and 60% of the 500-year-old company with a further 10% being given to Royal Mail's 150,000 employees, who will each collect shares worth about £2,200. Royal Mail's employees will also receive additional shares they applied for up to £10,000. | The government will collect between £1.7bn and £2bn from the sale, depending on exactly how many shares it sellson Friday. It is selling between 52% and 60% of the 500-year-old company with a further 10% being given to Royal Mail's 150,000 employees, who will each collect shares worth about £2,200. Royal Mail's employees will also receive additional shares they applied for up to £10,000. |
| Cable said the government had "struck the right balance" by "increasing the proportion of shares going to small investors to ensure they get their fair share". | Cable said the government had "struck the right balance" by "increasing the proportion of shares going to small investors to ensure they get their fair share". |
| But Labour accused the government of undervaluing the company and "massively short-changing" taxpayers by failing to set a higher price. The shares, which have been priced at the maximum 330p each, valuing the company at £3.3bn, are expected to immediately rise by 20-30%. Some City pundits are predicting the shares could top 450p – a 36% increase – on the first day of trading. | But Labour accused the government of undervaluing the company and "massively short-changing" taxpayers by failing to set a higher price. The shares, which have been priced at the maximum 330p each, valuing the company at £3.3bn, are expected to immediately rise by 20-30%. Some City pundits are predicting the shares could top 450p – a 36% increase – on the first day of trading. |
| About 730,000 people applied for shares in Royal Mail and almost 95% of the applicants will receive 227 shares worth £749.10. The government said the 5% of people that applied for more than £10,000 – who are likely to be well established investors because they would have had to have made their application via a stockbroker – "will not receive an allocation". | About 730,000 people applied for shares in Royal Mail and almost 95% of the applicants will receive 227 shares worth £749.10. The government said the 5% of people that applied for more than £10,000 – who are likely to be well established investors because they would have had to have made their application via a stockbroker – "will not receive an allocation". |
| It said penalising the biggest private investors was "in line with the treatment of larger applications in previous well oversubscribed privatisations". | It said penalising the biggest private investors was "in line with the treatment of larger applications in previous well oversubscribed privatisations". |
| Cable said: "Our priority has always been protection of the consumer through the universal service obligation, good value for money for the taxpayer, and a stable long-term ownership structure that will enable Royal Mail to be a successful enterprise and to raise commercial funding to invest. This listing achieves all of these objectives. We have struck the right balance, increasing the proportion of shares going to small investors to ensure they get their fair share and ensuring the employees get a 10 % stake in the business." | Cable said: "Our priority has always been protection of the consumer through the universal service obligation, good value for money for the taxpayer, and a stable long-term ownership structure that will enable Royal Mail to be a successful enterprise and to raise commercial funding to invest. This listing achieves all of these objectives. We have struck the right balance, increasing the proportion of shares going to small investors to ensure they get their fair share and ensuring the employees get a 10 % stake in the business." |
| If the shares rise by 20%, the 690,000 people granted £749.10 worth of shares will make a near-instant paper profit of £150. Demand from the public was so strong that it would have allowed all of the shares to be sold to the public. The government has increased the proportion of shares granted to ordinary investors from 30% to 33%, by reducing the amount going to pension funds and other institutional investors from 70% to 67%. | If the shares rise by 20%, the 690,000 people granted £749.10 worth of shares will make a near-instant paper profit of £150. Demand from the public was so strong that it would have allowed all of the shares to be sold to the public. The government has increased the proportion of shares granted to ordinary investors from 30% to 33%, by reducing the amount going to pension funds and other institutional investors from 70% to 67%. |
| Malcolm Hurlston, chairman of the Esop Centre, which promotes employee shareholding schemes, said it was "disappointing that so much" had been reserved for City funds over small investors. "This was an error of judgment: benefits should have accrued to individual UK applicants," he said. City investors applied for more than 20 times the number of shares that were available to them, heightening fears that the postal service was being sold off too cheaply. Analysts have said the government could have set the share price at up to 450p. If the shares were sold at this price, the government would have made an extra £700m. | |
| Chuka Umunna, the shadow business secretary, said: "We are seeing a centuries-old and much-loved national institution flogged off in a fire sale to fill the hole left by George Osborne's failed economic plan. Royal Mail is being sold off on the cheap with taxpayers being shortchanged to the tune of hundreds of millions of pounds. Yet out-of-touch ministers have ploughed on regardless and claimed this is a 'triumph'. | Chuka Umunna, the shadow business secretary, said: "We are seeing a centuries-old and much-loved national institution flogged off in a fire sale to fill the hole left by George Osborne's failed economic plan. Royal Mail is being sold off on the cheap with taxpayers being shortchanged to the tune of hundreds of millions of pounds. Yet out-of-touch ministers have ploughed on regardless and claimed this is a 'triumph'. |
| "It is astounding that the sale has been 20 times oversubscribed by City investors, which only serves to underline worries that ministers have got it badly wrong, with only a minority of shares going to small investors. | "It is astounding that the sale has been 20 times oversubscribed by City investors, which only serves to underline worries that ministers have got it badly wrong, with only a minority of shares going to small investors. |
| "Increasingly this privatisation is looking like a botched job from an out-of-touch government that puts the wrong people first." | "Increasingly this privatisation is looking like a botched job from an out-of-touch government that puts the wrong people first." |
| Billy Hayes, general secretary of the Communication Workers Union, which represents more than 100,000 postal workers and is currently planning days of strike action, said: "Now everyone knows that Royal Mail has been undervalued and sold on the cheap. | Billy Hayes, general secretary of the Communication Workers Union, which represents more than 100,000 postal workers and is currently planning days of strike action, said: "Now everyone knows that Royal Mail has been undervalued and sold on the cheap. |
| "This successful British company has been flogged on the cheap for no good reason. It was flourishing in public ownership, could have accessed private capital in public ownership – as many other companies do – and could have continued to provide a high service in public ownership. Instead, it has been thrown an uncertain future based on profit margins not services." | "This successful British company has been flogged on the cheap for no good reason. It was flourishing in public ownership, could have accessed private capital in public ownership – as many other companies do – and could have continued to provide a high service in public ownership. Instead, it has been thrown an uncertain future based on profit margins not services." |
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