Yahoo Finance Royal Mail Flotation Banks Confirmed
The Wall Street banking giant Goldman Sachs (NYSE: GS-PB - news) landed a plum role on Wednesday advising on the £2.5bn flotation of Royal Mail, the biggest British privatisation in decades.
The Government confirmation came after Sky News revealed that a syndicate of banks would be named for the sell-off of the state-owned postal operator, which is likely to take place through an initial public offering (IPO) on the London Stock Exchange (LSE: LSE.L - news) .
In a statement, the Department for Business, Innovation and Skills (BIS) confirmed the appointment of Goldman and UBS (Berlin: UBRA.BE - news) as the lead banks on the privatisation. Barclays (LSE: BARC.L - news) and Bank of America Merrill Lynch are to take more junior roles on the deal.
The Government insisted that all options for injecting private capital into Royal Mail remained open, although a stock market listing is now the clear preference of the Coalition Government.
"Preparations for the sale of shares in Royal Mail continue to build momentum and these appointments represent another important step towards a sale of shares this financial year," Michael Fallon, the Business Minister, said.
"While all options for the form of sale remain open, it is important that we are in a position to move ahead swiftly with our chosen route once we take the final decision.
"Given the lead time and preparatory work involved in readying an IPO, the appointed banking syndicate will work to make sure we are ready to proceed when the time comes and will be able to deliver strong, high quality investor demand to ensure a successful IPO for the taxpayer and for Royal Mail."
The Government declined to comment on the fees that would be paid to investment banks which work on the Royal Mail sale, but City sources said they were likely to represent about 1% of the capital raised from a sale of shares.
If ministers sell £1bn of shares, that would mean the syndicate of banks making about £10m on the deal - less than they would expect from a flotation of this kind.
The appointment of the banks comes a week after Royal Mail announced that it had more than doubled operating profit to just over £400m last year, buoyed by a solid performance in its parcels business as well as cost-cutting.
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