British Icon Soon to Shift into Private Hands

Royalmail

When a company “goes public,” ownership portions of the business are sold to the general public in the form of stocks. This allows a company to gain access to needed capital at the expense of reduced organizational control. Later this year, one of Great Britain’s state-owned entities will become a publicly traded company.

The British government is currently in the process of preparing for Royal Mail’s initial public offering (IPO). While details of the sale aren’t yet available, the sale of a majority stake in the business is expected to take place later this year.

Royal Mail was originally created in the 16th century for post transport. Today, the entity is one of Britain’s largest employers, earning $14.3 billion (in U.S. dollars) for fiscal year 2013 ending on March 31. Letter revenue was up 3 percent from fiscal year 2012 and parcel revenue was up 13 percent for the same period.

While letter revenue was up from the 2012, volume was down 8 percent. Stamp prices had increased from 75 cents to 97 cents (in U.S. dollar equivalent) on April 30, 2012.

Parcel volume was up 5 percent from 2012 along with its increase in income. Online shopping continues to be a driving factor in boosting parcel delivery services.

Royal Mail’s stronger financial performance for 2013 could have the effect of commanding a higher sales price for the organization. Lead banks involved in structuring the sale will release more details as the date of the IPO grows nearer.

What impact do you think privatizing Royal Mail will have on the delivery service?

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