Royal Mail shares will be priced at 330p when it makes its stock market debut, valuing the group at £3.3 billion, the Government has announced.
More than 690,000 private investors will receive shares under the offer.
The Government said all retail investors who applied for between the £750 minimum and £10,000 worth of shares will receive 227 shares worth £749.10, meaning that nearly 95% of all applicants will pick up stock in the privatisation.
But many hoping to secure a bigger slice of the company will be disappointed after the Government said retail investors who applied for more than £10,000 worth of shares will get none after the offer was seven times over-subscribed.
The Department for Business said a third of the stake in Royal Mail - excluding the 10% of free shares being given to Royal Mail staff - has been allocated to retail investors, up from an initial plan to offer the general public 30%.
The remainder will be sold to big institutional investors, such as pension funds, insurers and hedge funds.
The privatisation will initially raise £1.72 billion for the Treasury.
Conditional trading on the stock exchange begins tomorrow amid expectations that the share price could rise dramatically to around 400p.
Business Secretary Vince Cable said:
The Government is initially floating up to 52.2% of the value of the company, with a further 10% stake being allocated free to nearly 150,000 employees.
This will leave the Government with a 37.8% holding in the company, although this could be reduced to 30% under a so-called "over-allotment" option, which is dependent on share price performance following the flotation.
If its stake is reduced to 30%, the Government will have made £1.9 billion from the flotation.
Prime Minister David Cameron wrote on Twitter after the announcement:
But the Communication Workers Union said that the taxpayer has lost out in the Government's haste to sell-off Royal Mail.
"This successful British company has been flogged on the cheap for no good reason," CWU general secretary Billy Hayes said. "It has been thrown an uncertain future based on profit margins not services."