ROYAL Mail Group, the 360- year-old UK postal service, may be valued at as much as £4.3bn (€5.1bn) when it goes public, sources said.
The British firm's equity value, which excludes debt, could range from £2.8bn to £4.3bn based on research from the banks preparing the IPO, said the people, who asked not to be named because the talks were private.
The range is wide because, at the top end, some of the analysts were using more optimistic growth projections for the company's earnings as well as varying estimates on where Royal Mail should trade relative to its peers, one of the people said.
The postal service's sale would be the biggest UK privatisation since former prime minister John Major broke up British Rail in the 1990s. Royal Mail, one of the country's largest employers, has shifted away from letters to more lucrative package shipping amid competition from TNT Express of the Netherlands and Deutsche Post's DHL Express.
Profit margins for package delivery are at least 25pc higher than for letters, said Satish Jindel, president of logistics advisory firm SJ Consulting.
This helped Royal Mail double its profit in the year through March, even as daily letter volume dropped.
Royal Mail's package-shipping business increased about 5pc this year to 1.46 billion parcels, according to a company report from May, while the number of daily letters slipped 8pc to 58 million.
Operating profit for the 52 weeks ended March 31 was £403m, compared with £152m a year earlier.
The UK government said earlier this month it would sell a majority stake in Royal Mail "in the coming weeks".
The share sale is being prepared despite strike threats from postal workers against the listing. (Bloomberg)