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The privatisation of Royal Mail

The privatisation of Royal Mail has made headlines in recent days as the stock price rose to 479.50p on the first day of full trading on the stock exchange.

Questions accordingly have begun to be asked about whether the Government, who priced the shares at 330p, had undervalued the company.

The ICMA Centre’s lecturer in Finance, Dr Ogonna Nneji, was recently interviewed by David Prever, on BBC Radio Oxford and quizzed on his opinion about the valuation of the share price.

Dr Nneji said that based on previous initial public offering (IPO) of similar postal services organisations such as that of Singapore Post in 2003 and Belgian Post in June this year, which valued both of these businesses at around nine times their earnings before interest and tax (EBIT), Royal Mail shares may have been grossly undervalued at £3.3bn.

You can hear the full interview here at approximately 1 hour and 49 minutes into the programme.

Published 15 October 2013
Topics:
Business News

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