Government sells Royal Mail shares
Half of the Government's remaining stake in Royal Mail has been sold, raising £750 million to help pay down national debt, the Business Secretary confirmed.
Sajid Javid said 15% of the group had been sold to institutional shareholders at 500p a share - a slight discount to last night's closing price of 516.5p.
A further 1% will be given to Royal Mail employees, meaning staff including postal workers across Britain will share in a chunk of the company worth around £50 million, adding to the 10% awarded to employees when the coalition government began the flotation of the then-state-owned firm in 2013.
Members of the public were not involved in this latest share placing, although there will be further stake sales as the Government has said it intends to offload the rest of its remaining stake.
Mr Javid said the sale was "good value for taxpayers".
He added: "That money can be used to reduce public debt, which is how we will deliver lasting economic security for working people.
"Royal Mail has demonstrated that it can thrive in the private sector. It now has the ability to access the funds it needs to ensure that it has a sustainable future and can adapt to the changes in the postal market."
The shares were sold by way of an "accelerated bookbuilding" process which will see the taxpayer holding in the group halved from 30% to 15%.
Chancellor George Osborne told a City audience at Mansion House the sale, which was announced just after market close last night, would be followed by an award of shares to employees as a " special bonus for the workforce who have done such a great job turning Royal Mail around".
He added: "Thanks to them, Royal Mail's share price has risen; so we're going to give more of the shares to the staff."
But ministers were immediately criticised last night by Labour, who said they had failed to learn lessons from the earlier "botched fire sale" of the company.
Shares in the group have risen around 20% since the start of the year.
They are now more than 50% higher than they were when the rest of the company was floated in 2013 - in a controversial process, partly including a retail offer to ordinary members of the public.
Ministers at the time came under fire after the share price soared immediately, leaving investors with an instant profit at the expense of taxpayers.
The latest share sale also comes after a year in which Royal Mail cut the number of employees by 5,500. It has around 143,000 staff in its main UK business.
Mr Osborne first announced plans for the Government to sell its remaining stake in Royal Mail last week.
Shadow business secretary Chuka Umunna said yesterday: "It's disgraceful the Government is rushing to dump its stake in Royal Mail to City speculators without giving ordinary investors a look in.
"The Government does not seem to have learnt the lessons from their initial botched fire sale of the Royal Mail."
Last month, Royal Mail said annual profits had risen by 6% on an underlying basis to £740 million in the year to the end of March as a squeeze on costs helped offset a lower than expected performance from its parcels business.
The group warned that the parcels and delivery market remained challenging and pointed to the threat from Amazon's delivery network.
Chief executive Moya Greene saw her pay increase by 13% to £1.52 million in the last financial year as her basic salary was hiked for the first time since she joined the company in 2010.