Royal Mail is to be valued at £3.3 billion when it makes its stock market debut, with more than 690,000 private investors receiving shares.
The UK government said all retail investors who applied for between the £750 minimum and £10,000 of shares would receive 227 valued at £749.10, meaning nearly 95 per cent of all applicants will pick up stock.
But many hoping to secure a bigger slice of the company will be disappointed. The government said retail investors who applied for more than £10,000 worth would get none, after the offer was seven times over- subscribed.
The Department for Business said a third of the stake in Royal Mail – excluding the 10 per cent of free shares given to staff – had gone to the public, up from an initial plan to offer them 30 per cent. The remainder will be sold to big institutional investors, such as pension funds, insurers and hedge funds.
More than 93,000 people who submitted an application for the minimum value of shares will receive their order in full, with 37 per cent getting at least half of what they wanted.
The government said shares would be priced at 330p, at the very top of their range, valuing the business at £3.3bn. The privatisation will initially raise £1.72bn for the Treasury.
Conditional trading on the stock exchange begins today, amid expectations the price could rise to about 400p.
Business Secretary Vince Cable said: “We have struck the right balance, increasing the proportion of shares going to small investors to ensure they get their fair share and ensuring the employees get a 10 per cent stake in the business.”
The government is initially floating up to 52.2 per cent of the value of the company, with a further 10 per cent stake being allocated free to nearly 150,000 employees.
This will leave the government with a 37.8 per cent holding, although this could be reduced to 30 per cent under a so-called “over-allotment” option, which is dependent on share-price performance. If its stake is reduced to 30 per cent, the government will have made £1.9bn from the flotation.
But the Communication Workers Union (CWU) claimed the taxpayer had lost out in the government’s haste to sell off Royal Mail.
General secretary Billy Hayes said: “This successful British company has been flogged on the cheap for no good reason.
“It was flourishing in public ownership, could have accessed private capital in public ownership – as many other companies do – and could have continued to provide a high service in public ownership.
“Instead, it has been thrown an uncertain future based on profit margins not services.”
Royal Mail employees – including bosses – who applied for up to £10,000 worth of shares through the staff priority offer will receive their orders in full.
The value of free staff shares will be based on the closing price next Tuesday, when stock will be openly traded.
Mr Cable has been forced to defend the privatisation against claims that it has undervalued the public assets being sold, including large sites in London. MPs are concerned the sell-off will be highly lucrative for speculators, hedge funds and banks rather than the public.
Next week, a ballot of CWU members is expected to back industrial action over issues linked to privatisation.