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Smaller investors to be favoured by Royal Mail in IPO


According to reports from the BBC, Royal Mail is expected to reward smaller investors who subscribe to the minimum investment of £750 whilst setting a maximum cap of £10,000, meaning bigger investors will likely be shunned.

Essentially, anyone who applies for the minimum entitlement of £750 will be guaranteed to receive 100% of their allocation. However, anyone applying for over £10,000 will likely have their entire request rejected.

Shares have been priced at 330p, which is incidentally at the higher end of what the government aimed to achieve, therefore valuing the business at £3.3 billion. Furthermore, with the government selling 52.2% of the Royal Mail, the governments share is therefore valued at around £1.7 billion.

The source said that the government wanted to reward the small, as opposed to big professional investors, with up to as much as 33% of the total shares offer being expected to be sold to individual investors, therefore reducing the allocation for professional investors to 67% from the original figure of 70%.

There has been an initial strong demand from the public to purchase shares, possibly due to an emotional connection to the organisation from the general public. Therefore, this led to an increase in the initial pricing of the shares being revised to the top end of what the government was hoping to achieve which was between 260p and 330p.

If you feel this could affect your investment portfolio, or would like any advice with any of your investment needs, then contact one of our qualified advisers for professional advice. One of our advisers will answer any of your initial questions FREE of charge* within 60 minutes during office hours.

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