IPO Eye Q3 2013

Insights: Royal Mail

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Moving forward

The Royal Mail

On 12 September the Government announced its intention to proceed with an initial public offering of Royal Mail on the main market of the London Stock Exchange.

At time of publishing, shares were listed at 330p, at the upper end of the range, raising cumulative funds of £1.7b. After the first day of full trading they were priced at 489p – 48% above the initial offer price.

The Royal Mail is the first major government body to be privatised since QinetiQ. The IPO will give it access to private capital which will allow it to grow and compete.

The boom in internet shopping means parcel delivery is now far more important to Royal Mail than letter delivery, which is shrinking, and funds raised will be used to revamp the business to manage this change.

The IPO is 2013’s largest, and early signs are that it has been well received by both retail and institutional investors.

Private equity

Through 2013 we have seen the resurgence of the PE-backed IPO. Until this year domestic PE backed IPOs were sparse, but this year we have already seen seven on the main market.
At time of publishing, Oaktree backed Stock Spirits had announced its intention to float, and we are working with a number of other large, high profile private equity backed businesses looking to access the public markets soon.