Sovereign wealth funds in Abu Dhabi and Kuwait have each reportedly made a profit of nearly $30m each from their investment in the UK’s Royal Mail, after shares in the firm rocketed 40 percent above their issue price when it debuted on the London stock market on Friday.

Landsdowne, one of the world’s biggest hedge funds, and sovereign wealth funds including the Abu Dhabi Investment Authority (ADIA), Kuwait Investment Authority (KIA), Singapore’s GIC and Norway’s Norges all invested in the British postal service.

The Gulf funds are believed to have injected £50 million ($79 million) each, meaning the 40 percent surge in the value of stocks gave them an instant profit of around £18m ($28.7m), sources close to the deal told the CNBC news station.

Royal Mail’s shares rocketed above their issue price in Friday's stock market debut, fuelling a debate about whether they had been priced too low in order to guarantee a successful privatisation.

The share price increase, which inflated the value of the near 500-year-old company to £4.5bn ($7.2bn) in one of Britain's biggest state sell-offs for decades, came after criticism from the opposition Labour party that the Conservative government had short-changed British taxpayers.

British Business Secretary Vince Cable again denied the government had undervalued Royal Mail, whose red mail boxes decorated with the Royal Crest are a feature of British landscapes from Land's End in southwest England to John o'Groats in the far north of Scotland.

"You get an enormous amount of froth and speculation in the aftermath of a big initial public offering of this kind, it's of absolutely no significance whatsoever," he told the BBC.

"What matters is where the price eventually settles and if we look back on this in three months, six months time, or indeed years to come, that's what we're really interested in."

After receiving around 27 billion pounds worth of orders for the 1.7 billion worth of shares on offer, the government allocated 33 percent of the offering to members of the public, with the rest going to institutional investors.

Members of the Communication Workers Union (CWU), which represents postal workers and is holding a strike ballot over pay and job security, held a protest outside the London Stock Exchange on Friday in opposition to the sale.

Around 30 gathered, some dressed as criminals, holding banners with slogans such as "The great Royal Mail robbery" and "Fat cats steal the profits".

The government handed 10 percent of Royal Mail's shares to staff in the largest share giveaway of any major British privatisation, with just 368 of the 150,000 eligible UK-based workers declining to take up their free shares.

"Who wouldn't take free money?," CWU General Secretary Billy Hayes told Reuters. "But we're confident next week we'll have a big 'yes' vote for strike action."

Hayes said Friday's share price move showed the company had been undervalued by a billion pounds. "It's outrageous what's happening today," he said.

Staff are required to hold the shares for three years.

Royal Mail's public offering leaves the UK government with a 38 percent stake, but this could fall to 30 percent should it choose to exercise the overallotment option

Source: KUNA