Mail shares surge to new heights
Royal Mail shares surged to new heights on its first full day of stock market trading as its value soared to nearly 50% more than its original sell-off price - despite the looming threat of industrial action.
Business Secretary Vince Cable and investment bank Lazards are facing fresh questions from MPs over the privatisation amid concerns that ministers heavily underpriced the shares at 330p.
Mr Cable dismissed the steep rise when conditional trading began last week as "froth" but days later the stock was still ticking up, peaking at 490.7p today.
Its closing price of 489p implied a rise in the company's value of £140 million in one day, to reach £4.9 billion. The initial offer had valued Royal Mail at £3.3 billion.
Questions about the initial share price prompted Royal Mail chief executive Moya Greene to take the unusual step of agreeing with Mr Cable's comments - in effect implying that her own company was overvalued in the market.
But Dave Ward, general secretary of the Communication Workers Union, said the soaring price was "more proof that the company was undervalued by the Government's City mates".
The union is tomorrow due to announce a ballot result for strike action over issues such as pay and pensions linked to a privatisation.
Ms Greene alluded to the action in a series of interviews.
She told ITV News: "We need to start thinking about what sort of protections do we need as a company from our people from what has been probably too quick an approach to resort to industrial action?
"I just think we need to look at alternative ways to resolve disputes."
A spokesman said Ms Greene was referring to an offer to guarantee staff pay and conditions for three years in exchange for a new framework that would make it harder for workers to go on strike.
Meanwhile her remarks in another interview given to Sky News were taken to suggest that she was paving the way for stamp price rises but these were played down by sources close to the company.
They pointed to guidance in the company's prospectus that any increases would be broadly in line with the Retail Prices Index measure of inflation - currently 3.2% - over the three financial years ending in 2019.
Ms Greene was at the stock exchange this morning with business minister Michael Fallon and Danny Alexander, Chief Secretary to the Treasury, to launch the first full day of trading.
She said: "This marks the exciting next phase in our company's long and proud history. Royal Mail will continue to be an essential part of the fabric of the UK, providing the universal postal service that is cherished by the 29 million households and businesses across the country that we serve."
Ms Greene told ITV it was a "pivotal moment" in the history of the company following a period when it had been in a "very deep hole" - while dismissing concerns that the company had been undervalued.
She said Mr Cable's comments about market froth had "called that one right".
"We have to look through all of this," she said. "This is a great moment but we need to look through six or nine months down the road."
The volume of shares changing hands topped 36 million while there were reports of members of the public having difficulty selling. It was the first day ordinary members of the public who bought directly from the Government were able to do so.
Nearly 700,000 ordinary retail investors were allotted shares that are now worth £360 more than their initial price of around £750 and will have wanted to cash in.
However many would not yet have received shareholder reference numbers that entitled them to sell.
These were being sent out within two days of admission to the stock market - which officially took place today so some may not arrive until Thursday.
Royal Mail said tonight that around 100 million free shares have been allocated for eligible employees of the company, giving a total initial market value of approximately £489 million.
Each eligible full-time employee in Royal Mail is entitled to 725 free shares with an initial market value of £3,545.25.
Under HMRC rules, the maximum amount of free shares that can be allocated to an individual employee in any tax year is £3,000.
Royal Mail said due to the strong performance of the shares, this limit has been exceeded.
A total 613 shares worth £2,997.57 at the closing mid-price today have been awarded to each eligible full-time employee.
Less than 0.5% of around 150,000 of eligible full-time and part-time Royal Mail employees based in the UK chose to opt out of receiving free shares.