Royal Mail shares undervalued - analysts

Monday 07 October 2013 07.34
Royal Mail shares priced between  2.60 pence and 3.30 pence
Royal Mail shares priced between 2.60 pence and 3.30 pence

UK investors have been rushing to buy shares in Royal Mail ahead of tomorrow's midnight deadline, hoping to enjoy instant profits amid reports the company has been undervalued.

The shares have been priced at between 2.60 pence and 3.30 pence but are expected to rise in value when the company floats on the stock market.

The company is currently valued at £3.3 billion sterling but analysts at Panmure Gordon say it could be worth as much as £4.5 billion, UK media reports say.

The UK government is selling up to 62% of the business, with a 10% stake being handed for free to Royal Mail employees.

But Labour's Chuka Umunna has urged the Government to pull the plug on the privatisation to prevent a "massive bonanza" for city speculators, despite the late stage.

The shadow business secretary reiterated his concerns that many Royal Mail property assets are in prime locations and could be sold, resulting in a windfall for investors and leave UK taxpayers short-changed.

The prospectus highlights sites in London at Mount Pleasant and Nine Elms as being "surplus", with reports saying they are worth between £500m and £1 billion each, according to Labour.