Strong demand for Royal Mail shares will influence the government’s pricing. With a large pool of potential investors interested in owning part of the mail service, shares will be priced at 300-330p, the government has reported.
The government had previously announced that shares would be priced from 260 to 330p. Insiders have reported that offers have been made for Royal Mails shares that are a ‘few times’ the value of those currently for sale.
Analysts claim that the increased pricing based on strong demand means that Royal Mail shares may be undervalued. Labour has claimed that the business has not been given the valuation that it deserves, and that it could be sold for less than it’s worth.
Shadow business secretary, Chuka Umunna, believes that the service could be sold for less than it’s worth, with key Royal Mail sites being sold off following the change in ownership.
He believes that many of the Royal Mail’s sites could be purchased by developers for use as commercial and residential developments. His fears are echoed by economic commentators, who fear the company could be sold off in pieces for a quick buck.
“Royal Mail has a huge property portfolio in prime development sites in London and across Britain.”
The sale of Royal Mail sites could slow down the service’s delivery speed, as well as forcing many customers to travel significantly further to collect their mail. Up to 62 per cent of the business will be sold, giving private investors a major say in the way that the Royal Mail is operated.
The share sale agreement sets aside 10 per cent of the shares for employees of the Royal Mail. Despite the share agreement, workers of the Communication Workers Union (CWU) are considering a strike in response to the privatisation plan.
