23 September 2013 by Alexandra Jones
The government has announced its intention to proceed with an initial public offering (IPO) of Royal Mail.
The IPO follows changes to the Postal Services Act 2011, which lifted restrictions on Royal Mail’s ownership, allowing the government to sell shares in Royal Mail.
In addition, the Act established a new regulatory regime for postal services with Ofcom as the new postal market regulator and enabled Royal Mail’s historic pension deficit to be transferred to the government.
Further, Royal Mail and Post Office Limited were separated in 2012, meaning that the Post Office is not for sale and will remain, subject to the Act, in government ownership.
The IPO highlights are as follows:
– through participating intermediaries, who will apply for Royal Mail shares on behalf of their clients; or
– through a direct online or postal application to the government.
Commenting on the announcement, Business Secretary Vince Cable said: ‘This is an important day for the Royal Mail, its employees and its customers. HM Government is taking action to secure a healthy future for the company. These measures will help ensure the long-term sustainability of the six days a week, one-price-goes-anywhere universal postal service.
‘By announcing today that we intend to move ahead with a sale of shares in Royal Mail, we are completing the third and final part of the reforms agreed by Parliament two years ago. This delivers on the commitment in the Coalition Agreement to give Royal Mail access to private capital, including opportunities for employee ownership.’
Moya Greene, Chief Executive Officer of Royal Mail, added: ‘Our strategy is delivering a revitalised company, with a unique UK, multi-use network through which we are proud to deliver the universal postal service for all UK citizens. This network and our strong brand, coupled with the high service quality delivered by our people enable us to take full advantage of the growth in UK e-commerce to further enhance our pre-eminent parcels business. Combining this UK presence with our pan-European parcels business GLS, should result in a financial profile that combines revenue growth and margin progression to underpin strong cash flow generation.’