The U.K. government today set a price range for the initial public offering of Royal Mail that put a maximum value of £3.3 billion (about US$5.3 billion) on the 497-year-old state-owned postal service.
The Conservative-Liberal Democrat coalition said it will sell a majority of Royal Mail shares at between 260 pence (about US$4.15) and 330 pence each, valuing the company at £2.6 billion to £3.3 billion.
The offer, which closes on Oct. 8, will see the government disposing of at least 40.1 percent of Royal Mail with an extra 10 percent of the stock given away free to its 150,000 eligible employees. It could also be increased by up to 15 percent, if there is strong demand from institutional and private investors.
“We are encouraged by the interest shown by potential investors so far,” said Business Secretary Vince Cable, in a written statement.
Royal Mail is scheduled to make its debut on the London Stock Exchange on Oct. 11, ahead of threatened rolling strikes by postal workers who oppose privatization over fears of its impact on pay, pensions and job security.
The Royal Mail IPO is the biggest privatization since the Conservative government sold the nation’s state-owned railways in the 1990s. Three previous attempts to privatize the world’s oldest postal system have failed in the past 20 years due to opposition from lawmakers and unease among the electorate.
Royal Mail is profitable following several years of losses due to a radical restructuring and a surge in parcel deliveries driven by rapid growth in online shopping. Operating profit more than doubled to £403 million for fiscal year 2013, which ended March 31, 2013, from £152 million in the previous 12 months on a 5 percent growth in revenue to £9.5 billion.