Royal Mail Shares Up 36% After Floatation

The long awaited IPO of the Royal Mail was met with exceptional demand from the public in anticipation of the government having undervalued the business. The UK’s biggest privatisation since the 1980’s proved a big hit with investors with the flotation being heavily oversubscribed when the offer closed on Tuesday. The shares were priced at 330p on flotation implying a valuation of around £3 billion. Popular belief among city analysts is that the company was sold off too cheaply with the business valued at closer to £4.5 billion.

The floatation took place on Friday and was so successful that broker’s sites such as Hargreaves Lansdowne were down for most of the day and phone lines were jammed. Slightly more controversial was a late decision to cap all successful subscriptions to £750 for individuals investing £10,000 or less. Applications for more than £10,000 were not issued any shares.

The share price rose 36% on the first day of trading representing a significant gain for investors. Shares traded between 431p - 456p in what is described as one of the most oversubscribed IPO’s in history.