This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

Royal Mail flotation – private investors losing out both ways

Some ShareSoc members are very disappointed that they will not get any shares in the Royal Mail flotation because they subscribed for more then £10,000 worth. These are my personal comments: This seems to be discrimination against the moderately wealthy and those who just happened to have some spare cash in the bank.  Either everyone should have got the same allocation of £750 of shares, or there should have been a graduated scaling back. It’s just illogical.

What is being done is that those who understood what they were buying (i.e. the sophisticated private investor), will not get any shares while every “sid” who probably didn’t even bother to read the prospectus will. So Royal Mail will end up with a lot of ignorant small investors, who given the long term prospects of the business and the risks attached to it, may end up with an unhappy result.

Even more obnoxious is that instead of returning any cheques sent by direct investors to those who did not get an allocation, they have already presented them (i.e. too late to “stop” the cheques) so the Government will be holding on to folks money, tax free, for some length of time. So such investors are losing out both ways – no allocation of shares and giving the Government a free loan.

What do readers think of this? Post your comments below.

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