Royal Mail shares start trading at 450p

Royal Mail shares made their debut at the London Stock Exchange with a dazzling 38% up start at 456p today.

It has been reported more than 10 million Royal Mail shares were traded in the first 30 seconds and more than 100 million in the first hour. Early in the morning, the sale price stood at 330p which then rose more than 38% to 456p at the start of conditional dealing on the London Stock Exchange. By mid day the value had eased to 444p, still up by 31.8%.

The staggering price rise is likely to start a debate over whether the sales were undervalued.

Business secretary Vince Cable denied the high premium offer as underpriced. He said: “You get an enormous amount of froth and speculation in the aftermath of a big IPO of this kind. It is of absolutely no significance whatever. What matters is where the price eventually settles and if we look back on this in three months or six months’ time, or indeed years to come, that’s what we are really interested in.”

Experts say the prices rise was driven by big institutional investors’ demand for stock and that if the prices remain the same until December, Royal Mail would enter the FTSE 100 when the next set of index changes are made.

General secretary of the Communication Workers Union, Bill Hayes, described the sell-off as “a tragedy”. He said: “It would make not one scintilla of difference to the employees’ intention to vote for strike action next week.”

Figures show more than 93,000 people who had submitted an application for the minimum value of shares would receive their order in full, with 37% of investors getting at least half of the amount they wanted. Also, Royal Mail employees who had applied for up to £10,000 worth of shares through staff priority will receive their orders in full.

It is believed the privatisation of the 500 year old company will raise £1.72 million for the Treasury.

Aastha Gill