UK raised 750 million pounds in sale of Royal Mail shares
The UK government completed a sale of half of its remaining stake in Royal Mail.
The sale raised a total of £750 million. Last week Chancellor George Osborne announced plans to sell a stake in Royal Mail as part of a series of measures to cut public debt by £4.5 billion.
Two years ago Royal Mail went public, but the government held onto a 30 percent stake in the company.
UK sold 15 percent stake in Royal Mail
On Thursday the government announced that it sold a 15 percent stake at 500 pence a share to institutional investors.
The UK government now only holds a 15 percent stake in Royal Mail after this latest round of selling shares of the company.
In October 2013 the UK government raised £1.98 billion with the IPO of Royal Mail.
However, the sale was criticized because of its low initial price. On the first day of trading shares of Royal Mail surged 38 percent.
Since the IPO shares of Royal Mail are about 57 percent above the initial price of 330 pence.
On Wednesday shares of the company closed at 516.5 pence.
Sales “represents good value for taxpayers”
Sajid Javid, the British business secretary, said in a news release that the sale of the shares this week “represents good value for taxpayers”.
“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.”
Osborne said that that the sale 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”.
As ”thanks to them, Royal Mail’s share price has risen; so we’re going to give more of the shares to the staff.”
Shadow business secretary criticised decision
Shadow business secretary Chuka Umunna expressed criticised the government for its decision to sell Royal Mail shares.
“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.”