(Updates with Labour Party criticism of IPO's handling in fourth paragraph, banks involved in sale in eighth.)
Oct. 8 (Bloomberg) -- Royal Mail Group Ltd.'s initial public offering is significantly oversubscribed and many institutional investors that applied for stock will not get any allotment, two people familiar with the issue said.
Share orders priced below 330 pence ($5.30) risk missing out, according to the people, who asked not to be named while the IPO is under way. The sale closes to investors at 5 p.m. today and conditional trading commences on Oct. 11.
Royal Mail's privatization will be the biggest in the U.K. since British Rail was broken up in the 1990s. The sale of the 360-year-old company, which has refocused on package-delivery markets spurred by a trend toward web-based purchasing, opened on Sept. 27 and was fully subscribed within hours.
The level of demand has led Britain's opposition Labour Party, which wants Royal Mail kept in state hands, to question the handling of the IPO, with business spokesman Chuka Umunna saying taxpayers are getting "massively short-changed in a "bonanza" for speculators and hedge funds. He called on the government to suspend the sale "and think again."
TNT, Deutsche Post
The IPO's original price range of 260 pence to 330 pence a share was later adjusted to no less than 300 pence, people have said previously. A sale at 330 pence would indicate a market value of 3.3 billion pounds, based on 522 million shares sold.
One of the country's largest employers with more than 150,000 staff, Royal Mail has shifted away from letters to more lucrative parcel handling, competing with TNT Express NV of the Netherlands and Deutsche Post AG's DHL Express.
Prime Minister David Cameron's coalition government, which decided in 2011 to privatize Royal Mail, will keep 37.8 to 49.9 percent of its shares, assuming no over-allotment options. Some 15 percent of stock may be made available beyond the base offer.
Bookrunners for the sale are Goldman Sachs Group Inc., UBS AG, Barclays Plc and Merrill Lynch & Co., with Investec Ltd., Nomura Bank International Plc and RBC Europe Ltd. lead managers. The government is being advised by Lazard Ltd.
--Editor: Chris Jasper.
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