11th Oct 2013 07:22
LONDON (Alliance News) - Royal Mail PLC shares opened sharply higher in conditional trading Friday, jumping by more than a third above its IPO price.
Shares in the 501-year-old institution opened up 36% at 450 pence per share in conditional trading open to institutional investors only. Trades conducted Friday won't be settled until unconditional trading, open to retail investors, begins on Tuesday.
The UK government confirmed late Thursday that it priced the shares at 330 pence per share, at the top end of its range, valuing the postal firm at GBP3.3 billion, after huge demand for the shares.
The Department for Business, Innovation & Skills said that the institutional tranche on offer was more than 20 times oversubscribed, while the retail tranche for small investors was over-subscribed about seven times, with around 700,000 applicants.
As demand surged for the shares, the government made the decision to allocated anyone that applied for the minimum GBP750 in shares, up to GBP10,000 in shares, to receive GBP750 in shares, while anyone who applied for more than GBP10,000 shares will receive nothing at all.
It said that around 270,00 applicants, accounting for around 37% of the total, will receive at least half of the shares they applied for.
It also said that those who applied for up to GBP10,000 in shares will receive 227 shares, equivalent to GBP749.10 at the offer price.
With such a strong open for the Royal Mail shares, it is likely that the UK government will be in the firing line in political debates as to whether the shares were priced too cheaply.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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