Royal Mail share buyers profit as price soars by 35%
Royal Mail shares, which the government sold at 330p, started trading at 450p on Friday morning and peaked as high as 459p before settling at 445p at 9am.
Royal Mail shares 'seven times over-subscribed'
The Royal Mail share-offering for private investors was seven times over-subscribed, with 700,000 applications in total, according to the Business Secretary Vince Cable. Source; bbc.co.uk
Official Royal Mail valuation 'more than £1bn too low'
The British Government spends £21.7m in fees to advisers for what appears to be questionable valuation advice. Stockbroker Panmure Gordon says £2.6bn-£3.3bn valuation is an underestimate;.......
Gert Zonneveld, managing director of stockbroker Panmure Gordon, said he was convinced the government's official valuation of Royal Mail at £2.6bn-£3.3bn was a significant undervaluation.
Zonneveld believes Royal Mail is worth £3.7bn-£4.5bn, when compared with listed postal services in other countries. "I'm so convinced they [the government] got it wrong," Zonneveld said. "I think they're more than £1bn too low." Under Zonneveld's valuation, Royal Mail would join the FTSE100 list of Britain's biggest companies, which means tracker funds will be forced to buy the stock.
The Department for Business, which is running the sale, said: "The valuation will be determined by the book building process. The government has no intention to change the price."
The government's valuation was based on advice from investment banks Goldman Sachs and UBS after £21.7m in fees was paid to advisers.
Zonneveld predicted the controversial sell-off would be a raging success with the shares expected to soar by as much as 30% when they float on the stockmarket on 11 October. "I think this is going to be massively oversubscribed," he said. "Institutional investors who want £10m will increase their order to £50m because they know their orders will be scaled back."
Hedge funds are clamouring to buy shares, according to financial pundit David Buik. He tweeted: "I am hearing that a few hedge funds have subscribed for 100s of millions of shares in Royal Mail IPO!"
The massive demand means Royal Mail's stock will almost certainly be priced at the top end of the 260-330p-a-share price range, giving the company a market value of £3.3bn.
The strong demand means retail investors – the public – may not get all of the shares they have applied for. Retail investors will be allocated 30% of the shares on offer, with 70% going to banks and institutional investors. Orders for shares close on 8 October.