The UK government has appointed Goldman Sachs and UBS as the lead banks to run a London stockmarket listing of Royal Mail, taking the UK postal operator another step closer to a sale, which is
widely expected to take place later this year.The Department for Business, Information & Skills (BIS) said the appointments were in linewith the government’s strategy to prepare for the sale of shares in Royal Mail this financial yearthrough its preferred option of an Initial Public Offering (IPO). However, it insisted thatministers had made no final decision on the sale structure and “all options remain on the table”.
Goldman and UBS will act as joint global co-ordinators and joint ‘bookrunners’, while Barclaysand Bank of America Merrill Lynch will also be joint bookrunners.
Reporting to Business Minister Michael Fallon, the appointed banks will work with thegovernment, Royal Mail and their respective advisers “to prepare, structure and – subject to thegovernment’s final decision – execute an IPO in line with the government’s objectives for the sale,including protection of the universal service and getting best value for money for taxpayers”, theBIS said.
Fallon, who earlier this month said that several potential investors had expressed “significantinterest” in buying shares in the state-owned postal service, commented: “Preparations for the saleof shares in Royal Mail continue to build momentum and these appointments represent anotherimportant step towards a sale of shares this financial year. While all options for the form ofsale remain open, it is important that we are in a position to move ahead swiftly with our chosenroute once we take the final decision.
He continued: “Given the lead time and preparatory work involved in readying an IPO, theappointed banking syndicate will work to make sure we are ready to proceed when the time comes andwill be able to deliver strong, high-quality investor demand to ensure a successful IPO for thetaxpayer and for Royal Mail.”
The march towards privatisation began gathering pace last year after the European Commissioncleared the UK government to take on Royal Mail’s estimated £10 billion pension liabilities andregulators approved a plan to give the postal operator greater freedom to increase its prices. Thegovernment insists that privatisation of Royal Mail is the only way to give it access to externalcapital for future investment and is pushing ahead with plans to privatise the company thisfinancial year, despite union opposition.
Royal Mail is expected to become the fifth listed postal company in Europe after Deutsche Post,PostNL and Austrian Post, with a minority stake in Belgium’s bpost expected to be sold on theBrussels stock exchange this summer.
All four appointed banks had already been advising either the company or the government onoptions for a planned sale. The appointment of banks to junior syndicate positions for an IPO wouldbe announced in the coming months, the BIS said.
Royal Mail last week reported strong annual results, including a doubling of its full-yearprofit on the back of the online shopping boom. CEO Moya Greene said she had held “encouraging”meetings with potential investors in the UK, the US and Canada.
Banks have also been asked to gauge appetite for a £1.5 billion (€1.75 billion) syndicated loanto back the planned privatisation, according to reports last week.
