The British government wants to float or sell a stake in Royal Mail next year to kick-start thepostal operator’s much-delayed privatisation, according to media reports.
The Financial Times reported today that the government would move ahead with the long-plannedstep if Royal Mail’s finances continued to improve and if the financial market conditions for anIPO improved. However, a sale to a strategic or financial investor is also an option underconsideration.
The IPO, likely to involve a share sale to both institutional investors and the public, couldraise up to £3-4 billion, according to the newspaper.
Privatisation could begin with a partial share sale although a full disposal of 90% of RoyalMail shares is not impossible. Ten per cent of shares will be reserved for employees.
The news follows last week’s clearance by the European Commission of UK plans to provide theRoyal Mail Group (RMG) with £1.089 billion (€1.31 billion) in restructuring aid and to relieve RMGfrom “excessive” pension costs relating to its legacy monopoly position. This cleared the finalpotential barrier to the privatisation of the state-owned postal operator, following the passage ofthe necessary legislation by the UK parliament last year.
In response, the government will transfer RMG’s pensions liabilities and assets to the state.The Royal Mail Pension Plan currently has a deficit of £8.4 billion, while the transfer of thecompany’s assets will give the UK Treasury a short-term boost of £28 billion.
UK Postal Affairs Minister Norman Lamb said in response to the Brussels decision: “We havealways been clear that further modernisation by the company and a period of stability under a newregulatory framework, along with state aid approval, are needed before we can move forward with asale,” he added. “However, this decision is a fundamental step towards achieving that goal.”
