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Yes, it has finally been set in motion the Royal Mail is up for sale, and an institution as famous for its history of getting the mail through despite the efforts of *** Turpin et al as it is for its Postman Pat red vans going to face a less than guaranteed first class future. What is first class is that it promises an immediate dividend of 7.7% in the current financial year – better than interest rates at the bank albeit with more risk. Will the banks see withdrawals during this period from savings accounts? Or will they promote safety over risk? Or will they encourage investment given that several of them are coming to the market and this might be a way to draw out affluent investors into the asset class?
What though is the history of other privatizations some 25years back? Have the returns proved worthwhile, in the whole yes if you look at BT, British Gas, BP mixed if you look at British Steel, Sealink, British Aerospace and a disaster if you consider Rover and British Rail.
As ever even with government issues shares can tank and seemingly impregnable monopolies fail to monopolize or fade as market forces takeover? A poll carried out by MSN suggested Microsoft subscribers were anti the sale and feared for the outcome of service levels.
Whatever the future, I will be an investor, but for how long is largely a question of how soon I can act once the dividend has been paid.
Matthew Margetts, Partnerships Lead - Finance
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