The UK Government is gearing up for a significant public share offer of NatWest stocks, possibly commencing as early as June, marking it as the most notable public offering since the Royal Mail IPO in 2013. UK Government Investments (UKGI) has hinted at this timeline, raising anticipation for the event.
The financial rescue of NatWest, previously Royal Bank of Scotland, during the 2008-2009 crisis came at a substantial cost of £45.5bn to the Government, averaging 520p per share.
Given the current share price of 219p, the Chancellor has stated that any sale would hinge on favourable market conditions and ensuring value for money, a challenging prospect at present.
This upcoming sale aims to attract retail investors to own shares in a bank pivotal to the government’s intervention during the financial crisis. The gradual return of the bank’s shares to the market, primarily to institutional investors, has been a cautious process.
The recent departure of chief executive Alison Rose, following an admission of disseminating inaccurate information to a journalist, has sparked discussions about leadership stability. Paul Thwaite has been appointed as an interim CEO, which is understood to be a temporary arrangement.
Details regarding the execution of the share sale are awaited, with expectations set for the Chancellor, Jeremy Hunt, to unveil more information in the Budget on March 6th. The proposed structure might resemble previous plans, potentially offering a range of investment levels for retail investors with certain incentives.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, expressed her views on the Government’s initiative: “The government is gearing up to launch the highest-profile public share offer since the Royal Mail IPO more than a decade ago. With confirmation from UK Government Investments (UKGI) that the sale of NatWest shares could happen as early as June, it’s clear it’s all systems go to get the process off the ground.”
Streeter also highlighted the significance of engaging retail investors in prominent IPOs, reflecting on the potential for long-term investment returns and the vitality of the London markets. However, she advised caution due to the numerous unresolved questions surrounding the sale and NatWest’s recent performance, suggesting investors thoroughly evaluate the opportunity.
Despite NatWest’s less-than-expected third-quarter results, Streeter sees a potential upside: “Although recent third quarter results from NatWest disappointed the market, longer term there is potential opportunity ahead.”
