U.K. Said to Start $4.7 Billion Royal Mail IPO Next Month

The U.K. government is targeting September to start the sale of a majority stake in Royal Mail Group Ltd., the 360-year-old postal service, according to three people with knowledge of the matter.

Royal Mail may announce the intention to float in the middle of the month and the initial public offering could open for investors in October, with a potential valuation of about 3 billion pounds ($4.7 billion), the people said, asking not to be identified as the details aren’t public yet.

Companies including theme park operator Merlin Entertainments Group Ltd. and real estate broker Foxtons Ltd. are lining up IPOs in London, people familiar have told Bloomberg News. The listings may benefit from a pickup in U.K. economic growth, which accelerated in the second quarter more than initially forecast, according to data released today.

The U.K. plans to sell Royal Mail during the current financial year and hasn’t decided on specific timing, the Department for Business said in an e-mailed statement.

The government aims to stagger the Royal Mail IPO with two other large share sales planned for the coming months, one of the people said. The U.K. is considering selling about 5 billion pounds of Lloyds Banking Group Plc, Britain’s biggest mortgage lender, as early as September, a person with knowledge of the plan said in July. Barclays Plc, the U.K.’s second-largest lender by assets, is also planning a 5.8 billion-pound rights offering next month.

A Royal Mail spokeswoman declined to comment on the timing or size of the IPO.

The government plans to dispose of a majority stake in Royal Mail, including 10 percent of shares that employees will receive for free, Business Secretary Vince Cable said in July.

The sale of Royal Mail will be the largest privatization in Britain since former Prime Minister John Major broke up the country’s railway in the 1990s. Royal Mail, one of the U.K.’s biggest employers with about 159,000 workers, has sought to adapt its letter-focused network to more lucrative shipping of packages in the face of competition from TNT Express NV of the Netherlands and Deutsche Post AG’s DHL Express unit.

UBS AG, Goldman Sachs Group Inc., Barclays and Bank of America Merrill Lynch are among banks mandated for the sale.

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