Demand has been high for the Royal Mail privatisation but investors can still make an application and may possibly get shares.
Investors can buy Royal shares through most of major brokers but they are also available direct at www.gov.uk/royalmailshares
Application packs will also be held in 1,500 Post Office branches nationwide with details of which ones available at postoffice.co.uk/branch-finder . Those interested can also call 0330 123 0147.
What is happening?
The Government’s plans to float the Royal Mail were formalised with the publication of the prospectus yesterday. Between 40.1pc and 52.2pc of the company will be offered, or between 401 million and 521 million shares, although this could be increased because the interest has been so strong. The Government will keep a stake of between 30pc and 49.9pc. Around 150,000 staff will get 10pc of the shares for free.
Demand was massive with enough demand from institutions to fill their allocation within three hours and with stockbrokers inundated by requests from individual investors, who should end up with 30pc of the company.
A spokesman for Barclays Stockbrokers said: “Royal Mail is shaping up to be Barclays Stockbrokers’ most popular IPO to date with a fivefold increase in interest in day one orders compared to standard equity IPOs.”
It said a third of the orders were from those wishing to put their shares in an Isa, underlying the high level of demand from small investors.
How many shares can I buy?
The minimum investment is £750 and the there is, in theory, no maximum. However, demand has been such that the Government may need to set a maximum.
So will I miss out?
It is possible. In the Eighties privatisations, allocations of shares were limited and based on demand. But the Government has not confirmed that will definitely be the case this time. It says it will evaluate the total requests for shares before deciding whether to cap how many each applicant can have. It has not ruled out a first-come, first-served cut-off, which would probably see anyone applying after today missing out.
Should I try and invest?
The Daily Telegraph’s Questor column is impressed and rates the shares a buy. It is certainly easy to understand why brokers were reporting huge demand from small investors. The temptation of an estimated income of around 7pc in a world of rock bottom rates gives the shares plenty of appeal. The estimated yield would leave it standing head and shoulders above high income favourites Centrica (4.5pc), Tesco (LSE: TSCO.L - news) (4pc) and SSE (5.7pc).
Can that dividend be trusted?
The actual yield will depend on the final valuation of the company but the board has committed to paying £133m next July. The dividend is certainly well covered. Royal Mail could, in theory, afford to double the current suggested pay out given its level of profitability, although that would leave nothing for investment. The Government has said the company will adopt a “progressive” dividend policy.
How do I apply?
Application packs are also be available in 1,500 Post Office branches or investors can call 0330 123 0147. A list of brokers offering the shares, and their dealing costs, can be found at telegraph.co.uk/investing.
Possibly. It will have a value of between £2.6bn and £3.3bn. At the top end of that range it might challenge for the blue chip index when its constituents are next reshuffled in December.
What is the timetable for the flotation?
Institutions and retail investors have until October 8 to apply for shares in the flotation, giving them only 11 days to stake a claim.
The pricing of shares in the offer, together with allocation of shares, will be notified at 7am on October 11 before the start of ‘grey market’ or conditional trading an hour later. Full trading of the shares will take place from 8am on October 15.
The Royal Mail has published a list of brokers' costs: Read more detail on these fees here
Should you buy shares in Royal Mail? Download free report >