Royal Mail share demand soars on hopes of quick profit
Scramble for Royal Mail shares ignites political row as critics claim underpriced shares will sell the taxpayer short
Investors have rushed to buy shares in Royal Mail as tomorrow’s application deadline approaches. Predictions that shareholders will enjoy an instant profit of up to 40% has stoked demand ahead of the biggest privatisation for two decades. Stockbrokers are planning to open late today and tomorrow to cope with applications.
Shares will initially be priced at between £2.60 and £3.30 each, but are expected to rise sharply when trading starts next week. Analysts at Panmure Golden say the Royal Mail is worth up to £4.5 billion, far more than the previous upper valuation of £3.3 billion.If their predictions are accurate, anyone investing the minimum sum of £750 will receive an instant paper profit of £300.
The Daily Telegraph reports that ministers stand accused of offloading the mail service on the cheap, enabling City speculators to make millions from the sell-off at the expense of the tax payer.
“There is a vast difference between pricing Royal Mail shares conservatively and undervaluing them by £1 billion. This is ripping off the taxpayer on an epic scale”, former business secretary Alan Johnson told the Telegraph.
Sources within the party told the Telegraph that Labour was investigating ways in which parliamentary procedures could be used to delay the flotation and force a rethink on the valuation.
A Business Department spokesman said: “The Government is approaching the sale as a commercial shareholder and is seeking fair value for the shares and the best deal for taxpayers”.
The final share price will be announced on Friday and trading of Royal Mail shares will begin on the London Stock Exchange from next week Monday. ·