Royal Mail to be sold off 'in the coming weeks'Government intends to go ahead with flotation

12 September 2013

Letters being posted through a postbox

The government today announced its intention to go ahead with the privatisation of Royal Mail within weeks. 

Members of the public will be able to buy shares directly from the government or through an account with a stockbroker.

After announcing its intention in July to carry out what could be the biggest privatisation in two decades, the government today gave formal notice to the London Stock Exchange of its intention to sell a majority of shares in the company.

Royal Mail flotation - how will it work?

Royal Mail's 150,000 employees will receive 10% of shares free and and be eligible to apply for a further £500 worth if they wish. Institutional investors, like pension funds, will also get the chance to participate. Members of the public will be able to invest with a minimum of £750.

Full details of the share offer will be published in an official prospectus, which is yet to be released, but it has been confirmed that private investors will be able to buy shares directly from the government through either an online or postal application. 

Most stockbrokers will also be acting as 'participating intermediaries', meaning if you already invest in shares through an online account, you should be able to add Royal Mail shares to your existing portfolio. The shares will be eligible for both stocks and shares Isas and Self invested personal pensions (SIPPs).

A full list of participating stockbrokers is available from a dedicated share offer website.

Will Royal Mail shares be a good investment?

The value of shares will fall as well as rise and those bought through an Initial Public Offering (IPO) are no different. The price of the shares will be set by investment banks working for the government based on their valuation of the business. 

But IPOs offer no guarantees of a bargain - if investors thinks the IPO valuation is too high, the shares could fall in value once they are trading on the open market.

The price of the shares will not be known until after the share offer closes, so investors will not know the exact price when they apply.

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