Royal Mail is now a fully privatised company after the government disposed of its remaining 14% stake in the postal service last night. It sold a 13% shareholding to institutional investors for £591.1m, but 'gifted' the remaining 1% to employees, in a bid to placate those unhappy with the sell-off
The privatisation has been controversial, not least because the first round of sell-offs was widely regarded as being massively under-priced. It floated in 2013 with a price of 330p per share, but that soon rocketed and surpassed 600p last year.
At 455p per share today's share sale wasn't priced quite so low, but that's still at a 3.6% discount compared with yesterday's closing price. The chancellor of the exchequer George Osborne, who is also keen to get rid of the government's stakes in Lloyds and RBS, hailed it as a victory.
'By fully leaving state ownership we have a win all round - for customers, the workforce and the taxpayer,' said Osborne. 'Once again, we are also going to recognise the hard work of the staff who have done a great job in turning the company around, and give them a one per cent stake to share between them.'
The company's workers now own 12% of its shares, but the Communication Workers Union branded the sell-off a 'disgrace' and said it threatened Royal Mail's universal service obligation. 'The remaining government share in this profitable company should have been used to safeguard the public's voice in Royal Mail and ensure the continuation of daily deliveries to every address in the country,' said its general secretary Dave Ward.
For now the company's universal service is protected in law, and it could only be rescinded by parliament. But Royal Mail boss Moya Greene has described the regulation as 'unfinanceable and uneconomic,' and there are concerns that the company will aggressively lobby for the rules to be watered down now that it is free from state interference.
That would be an extremely risky thing for MPs to vote in favour of. But as revenues from letter deliveries continue to shrink and Royal Mail's competitiors sharpen their teeth, they might not have much choice.