An initial public offering of Royal Mail within the coming year is emerging as the most likely path to the long-stalled privatization of the U.K.’s state-owned postal operator.
The current strength of stock markets is increasing the attractions of an IPO, the business minister said. “There are certain advantages in an IPO and it’s one of the leading options,” Michael Fallon told the Financial Times. “The markets look pretty open at the moment — but they open and shut.”
The Conservative-led coalition government is weighing its options on how to partially privatize Royal Mail in fiscal 2013-14, with a sale most likely between the fall and early next year.
A sale to private investors and industry buyers also is being considered as Royal Mail’s improving financial performance boosts its value — currently estimated at around 3 billion pounds ($4.65 billion).
CVC Capital Partners, which has invested in the Danish and Belgian state postal services, was the only bidder when the previous Labour administration attempted to sell a minority stake in 2009 but backed down in the face of opposition among its own lawmakers.
The current government has further enhanced Royal Mail’s attraction by taking over its $14.7 billion pension deficit and easing the regulatory burden on the company.