Modest investors in Royal Mail to be rewarded

The book-building frenzy which ended midnight 8th October has seen applications of up to 15 times the number of shares on offer due to a mixture of bargain income seekers and instant profit-traders pile in for subscriptions for the 500-year old delivery service.

The allocation of Royal Mail shareholdings to small investors could be increased to 33% from the original 30% with smaller investors applying for £750 prioritised ahead of wealthy private investors.

Ministers are attempting to ensure that ‘ordinary investors’, those with modest means and ordinary households who apply for modest levels will obtain fair share of the holdings whilst wealthy investors attempting to subscribe for tens and thousands of pounds of shares may end up with nothing. This system was last employed in the heavily-subscribed privatisations of the 1980s.

The unprecedented demand will see the price of the shares at the top end of the 260p-330p range set yielding the Treasury £1.7bn, with many expecting the share price to rocket to 400p on the first week of trading next week.