StockMarketWire.com - Royal Mail shares were around 445p in conditional trade late this afternoon. Even at this first-class level, they were well beyond the pre-flotation price of 330p, which stamped the outfit with what was obviously a second-class £3.3b valuation.

Earlier, the shares flew up to 456p before easing by late morning.

This valuation was rendered out of date within seconds of trade opening this morning, suggesting questions will be asked about the controversial flotation pricing.

This and potential strike action by angered postal workers may act as a ballast on the share price in the short term.

Volume was exceptionally heavy, with considerably more than 100 million shares changing hands.

The offer comprised 521.7 million existing ordinary shares, excluding over-allotment arrangements representing 52.2% of Royal Mail's share capital on admission.

All members of the public who applied for shares through the retail offer, up to and including applications of £10,000, received 227 shares, the equivalent of £749.10.

This represented almost 95% of all members of the public who applied, that’s more than 690,000 people. Those who applied for shares worth more than £10,000 would not receive anything.

The first two days of conditional trading sees institutional investors trading Royal Mail shares with one another, with full trade beginning Oct. 15, the day before postal workers ballot on strike action.

If the sale of the 500-year-old mail service is canned the trades will be void.

About 150,000 Royal Mail staff will each get about £2,200 of shares, but they must hold on to them for at least five years.

Clearly there will be a plenty of disappointed investors, although institutions –- some foreign owned -– have done well out of the flotation, as have postal service workers who nabbed a 10% stake. Strike action over the flotation is still a possibility.

It was estimated that gross proceeds raised would be about £1,722 million assuming no exercise of the over-allotment option and £1,980 million assuming exercise in full of the over-allotment option.

Following admission, the UK Government will hold 37.8% of the ordinary Shares, which could be reduced to 30.0% if the over-allotment option is exercised.

The offer was substantially oversubscribed, the institutional tranche more than 20-times and the retail offer about seven times.

Business Secretary Vince Cable commented on the successful float:

“Our priority has always been protection of the consumer through the universal service obligation, good value for money for the taxpayer, and a stable long term ownership structure that will enable Royal Mail to be a successful enterprise and to raise commercial funding to invest. This listing achieves all of these objectives,” Cable said.

“We have struck the right balance, increasing the proportion of shares going to small investors to ensure they get their fair share and ensuring the employees get a 10% stake in the business."