Three-and-a-half years after joining the stock market, it is time to reappraise the high-profile listing of Royal Mail (RMG).

The privatisation of the UK postal service was seen as being in the same vein as those of British Gas and British Telecom back in the 1980s and led to huge demand among the public.

The shares surged from their 330p issue price on the first day of trading, 11 October 2013, closing some 38% higher at 455p. This led to criticism that the Government had sold the business on the cheap.

Now they languish below the 419.5p price at which the shares closed on the first day of dealings. Industrial action, regulatory issues and a
lack of growth have undermined the share price.

Anyone who participated at the 330p IPO price would have enjoyed 11% annualised return including dividends.

That is decent but not spectacular. The return on Zoopla property listings website parent ZPG (ZPG), which floated a few months after Royal Mail in June 2014, looks significantly better, for example.

Unlike Royal Mail, Zoopla’s IPO was not open to private investors. Taking the 230p close from its first day of trading (and despite a much less generous dividend policy than Royal Mail) the annualised return is above the 20% mark. (TS)

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