Post offices will remain in government hands, however, after the U.K. separated the postal service from its network of post offices last year.
Workers at Royal Mail -- which is one of Britain's biggest employers -- will be granted 10% of the shares, with the remainder on offer to institutional investors and the general public.
But the news isn't welcome in all corners. The Communication Workers Union opposes the sale and is gearing up for strikes over post-privatization pay and job security.
Britain has a history of selling high-profile state-owned enterprises, including Rolls Royce, British Airways and BP. But the Royal Mail was seen by some -- including conservative leader and privatization enthusiast Margaret Thatcher -- as off limits. Numerous efforts by past U.K. governments to sell the postal service have failed due to heavy opposition.
At the same time, the U.K. IPO market is heating up. A recent report by Ernst & Young found public offerings on London's premium market raised £2.4 billion in the first half this year -- more than the whole of 2012. London ranks third behind the New York Stock Exchange and the NASDAQ for the highest number of deals in the first quarter of 2013.