Government is to sell off its remaining 30% stake in Royal Mail, worth £1.5bn, to help cut the deficit

Otmane El Rhazi from Mindful Money » Shares.

The chancellor George Osborne has announced that government is to sell-off its remaining 30% stake in Royal Mail, worth some £1.5bn, in a bid to help cut the deficit.

Presently the government is aiming to clear the deficit by 2018/19 – and it intends to do so without upping income tax or VAT.

At this time, Osborne however has not said whether shares will be available to retail investors. Following Thursday’s announcement, by 2:30pm shares in Royal Mail were down by more than 3% at 508.3p.

Royal Mail was originally floated on the stockmarket in October 2013 at 330p per share. The IPO caused waves of controversy as the shares rallied robustly soon after they floated and as a result, the government was accused of selling off the stock too cheaply.

Commenting on the news, Laith Khalaf, senior analyst, Hargreaves Lansdown said: “The flotation of Royal Mail in 2013 really captured the public imagination, and prompted many people to invest for the first time. The float was so popular, share applications were dramatically scaled back, so we would urge the government to remember to tell Sid this time around too, rather than allocating shares to institutions only.”