Britain raises $1.2b from stake sale in Royal Mail

london — The UK government said it raised £750 million ($1.2 billion) from selling half of its remaining stake in Royal Mail as the new Conservative administration steps up efforts to reduce the nation’s debt.

The holding was cut to 15 per cent through the disposal of about 150 million shares via a placing with institutional investors, the Department for Business, Innovation and Skills said on Thursday after announcing the sale the previous evening.

Prime Minister David Cameron is seeking to deliver on pre-election pledges to pare debt that has more than doubled since the financial crisis to 80 per cent of economic output. The debut sale of Royal Mail in 2013, which raised about two billion pounds, was criticised for undervaluing the company after the stock surged after an initial public offering. Shares in the latest sale were priced at 500 pence apiece, 9.5 pence below Wednesday’s opening level.

The sale “represents good value for taxpayers,” Business Secretary Sajid Javid said in Thursday’s release. “That money can be used to reduce public debt.” Javid added that “Royal Mail has demonstrated that it can thrive in the private sector” and “now has the ability to access the funds it needs to ensure that it has a sustainable future.”

Shares of Royal Mail declined as much as 4.1 per cent on opening on Thursday and were trading 16.7 pence, or 3.2 per cent lower at 499.8 pence as of 8:35am in London, valuing the company at five billion pounds, a 16 per cent increase for the year.

Employees, who were given 10 per cent of Royal Mail when the privatization began in 2013, will receive up to one per cent of the shares in the current transaction, settlement of which will take place on 15 June.

Chancellor of the Exchequer George Osborne said June 4 that the state planned to sell all remaining shares in Royal Mail this year, and the Business Department said today that there is “no policy reason” to keep the remaining stake.