UK government to sell fifth of Lloyds stake
By Martin Arnold and Sharlene Goff
©Bloomberg
The UK government moved a step closer to returning Lloyds Banking Group to the private sector before next year’s election after it announced plans to sell more than £4bn worth of its shares in the bank.
The sale of more than a fifth of its stake is likely to take UK Financial Investments, which manages the stake on behalf of the government, to below the 25 per cent level at which it wields a blocking minority in Lloyds.
A bigger offering of Lloyds shares to retail investors is likely to be launched by UKFI as early as September, by which time the bank expects to be able to restart dividend payments, according to one banker familiar with the situation.
If that was followed with a share buyback by Lloyds and a further “mopping up” sale of shares in early 2015, the banker said the government could have sold its entire stake by next year’s election.
However, another banker said there was “zero chance” that the government would be able to sell the remainder of its holding in Lloyds this year – and it was likely to still have a stake beyond the May 2015 election.
People close to the transaction said the volatility of the market, triggered mainly by the crisis in Ukraine, meant the government did not want to risk involving retail investors at this stage.
The sale of 5.35bn shares in Lloyds, amounting to a 7.5 per cent stake, was to be agreed overnight on Tuesday via an accelerated bookbuilding process that is restricted to institutional investors. It will raise about £4.2bn for the taxpayer.
The offer comes six months after the government first sold some of the shares that it received when it used £20bn of taxpayer funds to bail out Lloyds during the financial crisis.
Spurred by signs of an economic recovery in the UK, institutional investors have been queueing up to invest in the country’s retail lenders, sending Lloyds shares up almost two-thirds in the past 12 months.
Despite rockier markets, bankers were optimistic that the sale would be completed at a good price. While the discount to Tuesday’s closing price is unlikely to be as narrow as in the first sale in September, bankers expected it to be about 3-4 per cent to Lloyds’ closing price of 79.11 on Tuesday.
A 4 per cent discount would generate about £130m of profit for the government – more than double the return it made from selling a 6 per cent stake at 75p per share last year – slightly above the 73.6p per share cost of its bailout.
A Treasury spokesman said the government would only conclude a sale if it met its objectives – “getting the best value for the taxpayer, maximising support for the economy and restoring private ownership”.
The Lloyds share sale contrasts with the government’s 81 per cent stake in lossmaking Royal Bank of Scotland, which it has little prospect of selling down for several years.
Morgan Stanley was added to the list of banks working on the Lloyds share sale. The other bookrunners were Bank of America Merrill Lynch, JPMorgan Chase and UBS. Lazard advised UKFI. The banks have all agreed to waive their fees.
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good Hollywood history, drama and finance movie
flick mentions not insuring slave ships which may or may not be true.
By Martin Arnold and Sharlene Goff
The UK government moved a step closer to returning Lloyds Banking Group to the private sector before next year’s election after it announced plans to sell more than £4bn worth of its shares in the bank.
The sale of more than a fifth of its stake is likely to take UK Financial Investments, which manages the stake on behalf of the government, to below the 25 per cent level at which it wields a blocking minority in Lloyds.
A bigger offering of Lloyds shares to retail investors is likely to be launched by UKFI as early as September, by which time the bank expects to be able to restart dividend payments, according to one banker familiar with the situation.
If that was followed with a share buyback by Lloyds and a further “mopping up” sale of shares in early 2015, the banker said the government could have sold its entire stake by next year’s election.
However, another banker said there was “zero chance” that the government would be able to sell the remainder of its holding in Lloyds this year – and it was likely to still have a stake beyond the May 2015 election.
People close to the transaction said the volatility of the market, triggered mainly by the crisis in Ukraine, meant the government did not want to risk involving retail investors at this stage.
The sale of 5.35bn shares in Lloyds, amounting to a 7.5 per cent stake, was to be agreed overnight on Tuesday via an accelerated bookbuilding process that is restricted to institutional investors. It will raise about £4.2bn for the taxpayer.
The offer comes six months after the government first sold some of the shares that it received when it used £20bn of taxpayer funds to bail out Lloyds during the financial crisis.
Spurred by signs of an economic recovery in the UK, institutional investors have been queueing up to invest in the country’s retail lenders, sending Lloyds shares up almost two-thirds in the past 12 months.
Despite rockier markets, bankers were optimistic that the sale would be completed at a good price. While the discount to Tuesday’s closing price is unlikely to be as narrow as in the first sale in September, bankers expected it to be about 3-4 per cent to Lloyds’ closing price of 79.11 on Tuesday.
A 4 per cent discount would generate about £130m of profit for the government – more than double the return it made from selling a 6 per cent stake at 75p per share last year – slightly above the 73.6p per share cost of its bailout.
A Treasury spokesman said the government would only conclude a sale if it met its objectives – “getting the best value for the taxpayer, maximising support for the economy and restoring private ownership”.
The Lloyds share sale contrasts with the government’s 81 per cent stake in lossmaking Royal Bank of Scotland, which it has little prospect of selling down for several years.
Morgan Stanley was added to the list of banks working on the Lloyds share sale. The other bookrunners were Bank of America Merrill Lynch, JPMorgan Chase and UBS. Lazard advised UKFI. The banks have all agreed to waive their fees.
______________________________________
good Hollywood history, drama and finance movie
flick mentions not insuring slave ships which may or may not be true.