Exclusive: Ministers Target Early Royal Mail Sale

The Government is mulling the sale of a stake in Royal Mail before it presses the button on a stock market listing valuing the company at several billion pounds.

I understand that Royal Mail executives have raised the idea of a 'pre-IPO [initial public offering]' share sale to an investor or group of investors during meetings with investment bankers in recent days.

Such a move could generate an earlier-than-expected windfall for the Exchequer of tens or even hundreds of millions pounds ahead of a full privatisation of the postal operator.

If they decide to proceed with such a move, it's conceivable that a minority stake in Royal Mail could be sold during the first half of next year.

Such a transaction would probably be contentious, however, since raising capital through a one-off minority share sale to an outside investor would be more expensive for the taxpayer than through a stock market listing.

Royal Mail is one of the few remaining state-owned assets whose sale would hand the Government anything more than loose change.

George Osborne, the Chancellor, is searching for as much revenue as he can generate from the sale of publicly-owned assets. The Treasury's coffers have already been bolstered (artificially, in the eyes of many analysts) from the transfer of Royal Mail's historic pension deficit onto the Government's balance sheet.

Royal Mail's management is also advancing preparations for a potential stock market flotation by lining up a group of City advisory firms.

Moya Greene, the company's chief executive, has been aggressively restructuring the business since she took over two years ago.

This week, the company faced the historically-familiar threat of industrial action amid suggestions that Royal Mail staff could boycott the delivery of rivals' post.

Royal Mail declined to comment on the progress of the Government's privatisation plans.