So the Department of Business, Innovation and skills has ditched the final 14% government stake in ROYAL MAIL GROUP at 455p a share, which valued the stake at £591m. Shares were sold to institutional fund managers and professional investors overnight rather than retail investors. Initially RMG’S share price fell by 4.4% to 451p just below the recent sale price. Shares stood at 472p yesterday.
The original sale of 70% of the Royal Mail Group at 330p almost exactly 2 years ago to the day with Sir Vince Cable and Michael Fallon in the driving hot-seat caused political furore. The shares shot up to 455p in two days, much to the harrumphing consternation of Messrs Leslie, Umunna et all on Labour’s front benches. Advice from Lazard and execution by Goldman and UBS was questioned – erroneously as far as I am concerned. This IPO had to be a ‘slam-dunk’ deal for the retail investor in order to attract sufficient buyers for the billions of Pounds of bank shares in Lloyds, RBS, TSB and eventually Williams & Glyn at a later date. To have delivered an over-priced ‘pup’ could have had dreadful connotations for the government, which desperately needed to lighten up its debt. It is not often I agree with Sir Vince Cable, but on this occasion, I think he was spot on the money!
I decided to have a little sniff around as to why the initial sorties in this IPO had seen the share price underperform. It was brought to my attention by an old market sage that a disproportionate amount of shares may have been allocated to 4 large hedge fund operators. If true, that may have been injudicious, thus causing a bit of indigestion to the share price – 161.5p at the time of writing (issue price 170p).
BOA Merrill, Goldman Sachs and Morgan Stanley announced that Worldpay’s issue price for its £2.5 billion IPO will be in the middle of the range at 240p. Conditional trading will begin on Friday 16th October, valuing the company at £4.8 billion. This payment operator was sold by RBS to Advent and Bain for £2 billion in in 2010. Ingenico Group had a bid of £6.6 billion rejected earlier this year. So far this year there have been 93 listing on the LSE totalling £5.3 billion – half 2014 of £11 billion from 136 deals.