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Royal Mail to float – what interested investors should do

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The biggest privatisation for two decades

 

·         Royal Mail to float

·         What interested investors should do

·         IPO Q & A

Today the Government have announced plans to float the Royal Mail in what could be the largest privatisation for two decades. The state-owned postal service could be valued up to as much as £3 billion in an initial public offering (IPO) taking place this year.

 

Richard Hunter, Head of Equities, Hargreaves Lansdown;-

““The success of the Direct Line Group & esure share offers has reignited private investor interest in IPOs. The offer of shares to the public is reminiscent of the float of British Gas in the 1980’s which was accompanied by the “Tell Sid” Campaign. Shares will be marketed to the public and any investors aged over 18 will be able to apply for shares.

 

What interested investors should do

 

Richard Hunter

 

“We don’t have the details of the IPO yet. Investors can register their interest with a stockbroker now and when a prospectus and application pack becomes available they will contact you with all the information needed to invest.”

 

Tell Sid? – Investing in an Initial Public Offerings (IPOs) Q & A

 

From the first “Tell Sid” privatisation of British Gas in the 1980s, flotations and Initial Public Offerings (IPOs) have always been of interest to the investor. Richard Hunter, Head of Equities, explains how they work.

 

What is an IPO?

 

An Initial Public Offering (IPO) is where the owner(s) of a company sell all of part of their stake to the public in order to raise money. This cash can then be used to grow the company or simply be returned to the owners. An IPO is also commonly called a flotation.

 

An IPO may only be made available to institutional investors or to a mixture of private (retail) and institutional investors. An IPO happens in three stages.

 

1.            The Intention to Float – The company announces to the stock market, public stating they wish to float the company

2.            Preparation of Prospectus – The company will then prepare and release a prospectus. This aims to be the definitive document relating to the launch and will describe the offer in detail. Applications to buy shares in an IPO should always be made on the basis of the information contained in the prospectus

3.            Sale of shares – The company and their advisers invite applications for the shares. The IPO will be open for a fixed time known as the Offer Period

 

When will the share price be known?

 

In some cases fixed price offers are made and the investor will know the share price in advance. Alternatively the share price will not be known until the date the company floats. In some cases the company will provide an indicative range for the flotation price of the shares e.g. £2.00 to £2.20. The precise price won’t be fixed until near the listing date and may depend on demand for the shares. Once the share has floated on the open market, the price will the rise and fall as all other shares do.

 

Why would investor want to get buy shares at IPO?

 

An IPO allows investment in a company when it first enters a stock market.

 

When will shares go on sale?

 

The timetable for an IPO generally spans four weeks. An Intention to Float announcement is made and then around two weeks later the prospectus is issued and the offer period starts. It is during this period investors can apply for shares.

 

Where can investors get a prospectus for an IPO?

 

Interested investors should contact a stock broker who will be able to register your interest in receiving a prospectus. In some cases a stock broker will provide research and updates as information becomes available. For example, Hargreaves Lansdown has been involved in the majority of IPOs over the last 30 years.

 

How do investors buy IPO shares?

 

Investors can buy IPO shares through a stockbroker. A share dealing account should be opened and money deposited to buy the shares. This can be done online or over the telephone using a debit card, or alternatively a paper application accompanied by a cheque can be used.

 

How many shares can investors buy from an IPO?

 

There is normally a minimum number – If the offer is oversubscribed investors may not be able to buy all the shares they want to buy. If this is the case the balance of money can be used to buy other shares or can be refunded.

 

Can investors buy IPO shares through an ISA, SIPP or Junior ISA?

 

In some cases money in an ISA, SIPP or Junior ISA can be used to buy IPO shares. This depends upon which market the company is listing upon and the type of IPO.

 

What dealing costs are paid?

 

Buying IPO shares is often free for investors.

 

Hargreaves Lansdown’s charges are as follows:

 

IPO share purchase                         Free

Share account charge                     Nil (Other charges to hold shares may apply e.g. in ISA and SIPP (ISA – 0.5% capped at £45 a year, SIPP – 0.5% capped at £200 a year).

 

Selling IPO shares will be subject to a dealing charge from £5.95 and no more than £11.95 (online).

 

Buying IPO shares after the offer period, when the shares are available in the market, will be subject to a dealing fee of no more than £11.95 (online) plus stamp duty of 0.5%.

 

Is there a minimum holding period? How quick can an investor sell?

 

There is no minimum period, but generally it takes 3 working days from the date of the float to issue the shares and selling cannot practically happen before then.

 

How will investors be able to sell IPO shares?

 

This is easy. Simply choose when and how many to sell, and execute the deal online or alternatively instruct a sale over the telephone. Dealing online is almost always cheaper than dealing over the telephone.

 

Will there be a dividend from IPO shares and if so, how will they be paid and when?

 

This depends upon the company. The prospectus will normally detail any proposed dividend policy.

 

How will investors find out if there are any special discounts or shareholder perks?

 

If there are any, they will be detailed in the prospectus

 

What are the risks?

 

The value of shares will fall as well as rise, so investors may get back less than they invested. Dividends are not guaranteed and, if paid, are variable. During the period between the Intention to Float being announced and the start of the offer period, the intention may be withdrawn. This rarely happens.

A company which is the subject of an IPO may not have a long track record and could be difficult to value or calculate a fair price. In many IPOs investors do not know the share price before committing to buy and therefore may end up buying at a higher price than they wished.

Investors should read the prospectus and any supplementary documentation as this will include the main risks of investing.

 

Women reassured with safe alternative to breast implants

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Externally worn breast forms are never dangerous, says world leader in breast care

 

Women concerned about the recent health scares over the controversial PIP breast implants can rest assured that the silicone used to manufacture its externally worn prostheses will never pose any danger to health, says world-leading manufacturer of prosthetic breast forms, Amoena.

 

Amoena manufactures silicone breast forms, a globally recognised medical device worn in the cup of a bra to replace a woman’s breast once she has undergone breast cancer surgery.

 

In the UK, around 48,000 new incidences of breast cancer are diagnosed each year*, with most women undergoing breast surgery as part of their treatment.  Many use a prosthetic breast to restore their appearance and provide the balance that helps prevent postural problems, although surgical solutions, such as breast reconstruction, are on the increase.

 

However, while women may be concerned about possible risks associated with surgical procedures, there is never any danger of health scares if women use an externally worn prosthesis.

Amoena invented the externally worn silicone breast form in 1975, revolutionising the level of post-operative care that was offered to women following breast cancer surgery.

 

“Since then we have dedicated ourselves to research and development,” explains Helmut Wild, vice president of research and development at Amoena, “working closely with medical specialists and breast-operated women to ensure that we incorporate the latest technology into our designs.  The result is innovative breast forms of the highest quality.”

 

One of these innovations offers women a realistic alternative to breast reconstruction.  The Amoena Contact breast form adheres directly to a woman’s chest wall and stays securely in place all day long.  “Contact looks, feels and behaves just like a real breast,” says Wild.  “It offers women the freedom of movement and the choice in clothes and lingerie that they had before surgery.  We’ve had feedback from thousands of delighted customers, telling us that it has quite literally changed their lives.”

 

Over the decades Amoena has established manufacturing processes that produce the most durable, skin-friendly, lifelike breast forms in the industry.  “For a woman who has suffered the trauma of breast cancer, our breast forms are the closest thing to a real breast,” says Wild.  “And our state-of-the-art manufacturing plant and patented processes ensure that her safety is paramount and her peace of mind is assured.”

 

As long ago as 1992, Amoena was the first breast prosthesis manufacturer in the world to set up a certified quality management system that conformed to BS5750/2, the internationally recognised quality standard at the time.

 

“Today’s standard for medical device manufacturing is ISO13485, and our rigorous quality management process ensures that we remain fully compliant today,” continues Wild.

 

“Each Amoena breast form is certified as a medical device globally, which requires biocompatibility testing according to international standards, to ensure that materials coming into contact with the skin are completely safe, non-toxic and non-irritant.”

 

“Only the very best materials are considered after passing our intensive testing in production conditions and fulfilling all biocompatibility requirements. Amoena has the widest experience in producing silicone breast forms, the highest number of product and process patents and we have developed our own bespoke production technology that ensures rigorous end-to-end quality control.”

Wild concludes:  “I think it’s important to emphasise that no external breast form poses any health risk whatsoever to the women who wear them.  For women who have suffered the trauma of a breast cancer diagnosis, and who do not want to undergo further surgery, we are pleased to be able to provide a solution that is totally safe and of the very highest quality.  It’s a reassuring and realistic solution at what is undoubtedly a very stressful time in any woman’s life.”

 

* Based on figures for 2008, published by Cancer Research UK – www.cancerresearchuk.org