Royal Mail Shares Surge in Debut

LONDON - Shares of Royal Mail rose 38 percent on their first day of trading on the London Stock Exchange on Friday, adding to criticism from some policymakers that the government sold a majority of Britain’s main postal service too cheaply.

Royal Mail, whose roots date back to the court of Henry VIII in the 16th century, made its stock market debut after its shares were priced at 3.3 pounds, or $5.30, each on Thursday, valuing the company at $5.3 billion. They shot up to as much as 4.56 pounds during conditional trading among institutional investors on Friday morning. The shares will open for full public trading on Tuesday.

The privatization is the largest sale of state assets since the breakup of the country’s railway operation in the 1990s, and demand for Royal Mail shares was seven times the stock being offered. Some investors said they were encouraged to buy Royal Mail shares by the company’s growth in parcel service and by memories of the privatizations of the 1980s, when many investors made an immediate gain after share sales of companies like British Gas.

The large demand for the shares and their jump in price on Friday prompted criticism from the opposition Labour Party, which argued that the government priced Royal Mail shares too low. Chuka Umunna, the Labour Party’s business secretary, said taxpayers would get “massively short-changed” and there were calls for the share sale to be pulled amid suggestions that it was undervalued.

Vince Cable, the business secretary, told BBC radio that there was an “enormous amount of froth and speculation” propelling the first-day price movement and that “what matters is where the price eventually settles.”

About 150,000 Royal Mail employees are set to benefit from the share price increase so far. The government, which is keeping a 38 percent stake in the company for now, offered them free shares, worth 10 percent of the company, as part of the sale.

The Communication Workers Union, which represents some Royal Mail employees, said it continued to oppose the sale, which was “about greed” and was awaiting the results of a strike ballot on Wednesday. The union conducted a protest outside the London Stock Exchange on Friday morning.