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Ground-breaking Royal Mail shares sale to raise up to £3 billion

The government has formally announced the floatation of Royal Mail shares. The share floatation marks the beginning of the end of a vibrant 378-year history of state ownership of the world’s oldest postal service. Anybody aged 18 or over who has a UK bank account and address will be eligible to buy a stake in the £3 billion business in a share sale that will take place “in the coming weeks.”

Royal Mail share sale

Royal Mail share sale will not only be open to UK investors, but also to institutional investors from around the world. This raises the prospects of the world’s oldest postal service being ultimately controlled by foreign owners. Margaret Thatcher had rejected a similar privatisation move when she was prime minister, stating that she was “not prepared to have the Queen’s head privatised.”

Business Secretary Vince Cable, however, has hailed the privatisation announcement saying the move marks “an important day” in our history. The postal service itself revealed that it plans to pay £133 million in dividends in July next year instead of the estimated £200 million, which it would have paid had it been listed for a whole year.

The Royal Mail shares will be floated on the London Stock Exchange and are expected to raise up to £3 billion. The minimum amount you can invest in the business is £750. It is not clear what the maximum investment amount for adults is because the share prospectus has not yet been published.

You can buy the shares in any of several ways when the postal service debuts on the stock market this autumn, including applying directly to the government by post. Given previous history with similar share sales, you can expect this particular mode of shares purchase will be riddled with its fair share of problems. Regardless, the government has hailed the largest privatisation in decades as a ground-breaker.

There is no doubt that the Royal Mail shares sale will be a ground-breaker, especially since it becomes the first company in history to come to market while its service is blocked by an industrial strike.

Postal workers strike

Postal unions have warned that strikes are “inevitable” over Royal Mail shares sale. Union bosses are bracing themselves for industrial walkouts, which they hope will disrupt the government’s Royal Mail privatisation timetable as much as possible.

Billy Hayes, the Communication Workers Union’s general secretary, said: “We remain convinced that privatisation is the wrong decision for Royal Mail. It would be bad for customers, bad for staff and bad for the industry. It would destroy a centuries-old public service.”

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