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Royal Mail added to FTSE 100

Article By: ,  Financial Analyst
December 12, 2013 10:45 AM

Royal Mail is to be added to the FTSE 100 just a few weeks after the privatisation of the UK's postal service went through.

Stocks in the company have proven to be hugely popular, which has led to some critics of the government's decision to float Royal Mail on the stock market to say it was underpriced.

The share price of Royal Mail is now 80 per cent higher than it was when the firm was first floated on the stock market, with investors keen to snap up shares in the company at the low price.

Royal Mail will now be added to the FTSE 100 when the next changes are made to London's top index, with the amendments set to go through on December 23rd.

Initial flotation

When stocks in Royal Mail initially floated on the stock market, they were priced at 330p, with the Labour Party among those to accuse the government of setting a price that was too low. Since then, the share price of the company has risen to around the 600p mark, which critics say means the taxpayer has missed out on millions of pounds of revenue that should have gone into the public purse.

Royal Mail has therefore been one of the major success stories for the UK's stock markets in the last 12 months, with stocks regularly ending trading sessions well up on the price they started at.

Ashtead Group, the construction equipment company, will be joining Royal Mail on the FTSE 100 when the changes to the index go through later in the month.

The FTSE 250 is also going to be welcoming some new names to the market, with Croda International and Vedanta Resources set to be added on December 23rd.

This morning (December 12th), the share price of Royal Mail is slightly down on the start of the day. By 08:56 GMT, its stocks were trading 0.22 per cent down for the day, but they remained around the 585 mark.

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