State sells off last 14% stake in Royal Mail for £660m

The Government is selling its remaining 14 per cent stake in Royal Mail for an estimated £660m. The Department for Business announced the placing to institutional investors last night after the stock market closed, and is expected to confirm the price achieved for the tranche this morning.

It will leave the 500-yearold postal service fully under private ownership for the first time in its history.

In a statement yesterday a Department for Business spokesperson said: “The Business Secretary has today authorised a sale … Market conditions should allow a successful sale and the realisation of value for the taxpayer.”

Royal Mail shares closed last night at 470.3p, up 0.58 per cent on the day, its highest point since late August, suggesting that the Government had been waiting for an upbeat moment to cash-in on its remaining shares in the former state-owned postal firm.

It sold about half of its thenexistingstake,whichamounted to approximately 15 per cent of the company, at 500p per share in June for £750m.

Both sell-offs have been at well above the 330p share issue price of the company’s shares two years ago. The flotation was mired in controversy after the Government was accused of undervaluing the firm. A report last year suggested it had made £180m less from the sale than it could have, as shares could have been valued up to 30p more than the flotation price, given the high level of demand. Shares climbed 38 per cent in value on the company’s opening stock-market trading day.

The Government was also accused of letting down ordinary savers by failing to prioritise their applications adequately. It was also criticised for allowing profithungry investors – including some of the City firms who had advised the Government over the sale – to cash-in on the stock’s rise in on the same day it floated.

Royal Mail will still work with the Post Office, which remains wholly owned by the Government. The two institutions are linked by a 10-year contract, signed in 2012, that promises that Royal Mail will continue to deliver through Post Office services.