Royal Mail Privatization

According to the Business News on ‘BBC’ which was updated on 8 October 2013, the government intended in privatizing Royal Mail as this had been planned for many years. Royal Mail employees have been given 10% of the shares as part of a stock market flotation. Business Secretary Vince Cable described it as “the biggest employee share scheme for almost 30 years”. Meanwhile, the public have been given the opportunity to apply to buy shares online until 8 October.

An amount of 750 pounds will be the minimum investment for public while the minimum investment for those Royal Mail employees who wished to buy additional shares is 500 pounds. However, an additional 15% of the government’s stake will be sold if the demand for the shares is very high in what is called an ‘over-allotment’ option. “The company needs access to private capital in order to grow and compete. ” said the government and Royal Mail management.

Parcel delivery from internet shopping is far more important to Royal Mail’s business compared to the delivery of letters, which is shrinking. Furthermore, in order to try to cut public from spending and borrowing more money, the government has been reluctant to invest large sums of money at a time. Moreover, Royal Mail has also been facing competition from private operators such as ‘TNT’ and ‘UK Mail’. Post Office will not be affected in the privatization because it is now a separate company from Royal Mail.

The government said that they want to invest more money in the Post Office network as they want to prevent branch closures and eventually set it up as a mutual business. In conclusion, the reason I have chose this particular topic is because Royal Mail is one the most popular and fast delivery postal service Company in the United Kingdom and I personally agree in Royal Mail being privatized as it is giving them a chance to grow and compete in business.