Listed at an initial price of 330 pence, Royal Mail traded north of 450 pence less in than an hour, prompting those with an incredibly short-term view to complain it should have been priced higher to start with.
Business secretary Vince Cable described the noise around the early price moves as the result of “froth and speculation” that surrounds an IPO of this size – Royal Mail was valued at £3.3bn and at around 440 pence per share would be a FTSE 100 company at the index’s next review.
What is more important, he said, is what the share price is in six months, a year’s time or longer.
He added: “The bulk of the shares have gone to long-term institutional investors, stable investors, some overseas investors, but mainly British pension funds and insurance companies who are there for the long term.”
Yesterday, Richard Hunter, head of equities at Hargreaves Lansdown, said: “This IPO has captured the public’s imagination and will hopefully invigorate the nation’s appetite to invest.
“All eyes will now be on the expected flotations of the bailed-out banks. Hopefully the Government will recognise this opportunity to extend the nation’s savings and investment culture and allocate a significant portion of future privatisations to retail investors.”
However, any flotation of the likes of Lloyds and Royal Bank of Scotland is unlikely to fuel the imagination quite like Royal Mail, certainly not among retail investors.
