Bookmakers say Royal Mail shares will debut at 340p
Analysts say demand for Royal Mail shares will mean shares will exceed government expectations
CITY bookmakers have predicted that when the Royal Mail makes its debut on the stock market next week, shares will hit 340p each.
The Government has said that it will set the share price between 260p and 330p when it begins its flotation on 11 October - although shares will not begin trading in full until 15 October - valuing the group at £2.6bn to £3.3bn.
However, spread-betting firms operating a 'grey market'- where market dealers manage orders for new shares before they are issued, which allows the issuer to determine demand and price the shares accordingly before the IPO - have suggested the price could rise above the expected range.
Alastair McCaig, at IG Index, said: "The conviction buying we are seeing, especially this close to the float, is even stronger than the reaction we saw prior to the Facebook launch."
According to The Times, this suggests ministers may float the company at a higher price than it originally expected, which would mean investors will receive fewer shares for their minimum investment (£750).
Investment applications have to be submitted by the end of next Tuesday, three days ahead of the flotation date.
City sources have also revealed that there is enough interest in the shares that the government's share holding could be reduced to 30 per cent. Ten per cent of the shares will be given to around 150,000 Royal Mail employees.
Ishaq Siddiqi, of ETX Capital, told the paper: "Positive press is driving up the retail demand. Our retail clients seem pretty chirpy and we are seeing a flurry of demand from institutional buyers." ·