News Column

Lloyds group to sell off one-quarter of TSB business in stock flotation

May 23, 2014

bridget Morris; bridget Morris

Lloyds Banking Group will next week launch the sale of about 25 per cent of its TSB business via a stock market flotation with the pricing expected to be below book value, banking industry sources told Reuters. The amount sold is likely to be at the bottom end of earlier guidance, they said, reflecting a cooling of investor interest in UK company flotations in recent weeks following a flurry of activity earlier in 2014.

TSB's Chief Executive Paul Pester said in November Lloyds could initially sell between 30 and 50 per cent of the business, which has 631 branches and 4.5 million customers, making it Britain's seventh- biggest lender.

But Lloyds Finance Director George Culmer said in May the bank would sell a minimum of 25 per cent.

Banking industry sources said the IPO, which will take place before the end of June, is expected to value TSB below its book value of pound(s)1.5 billion, meaning Lloyds will make a loss on the sale.

"They're being a bit more realistic on valuation. There's just not appetite in the market," one of the sources said. "There's just a rash of consumer-exposed IPOs, and TSB is very consumer-focused."

Clothing chain Fat Face pulled its planned London listing on Thursday, citing market conditions as the main factor in its decision. Holidays-to-insurance firm Saga priced its IPO at the bottom of its original range.

Lloyds must sell all of TSB by the end of 2015 as a condition of its pound(s)20.5bn state bailout in 2008.

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Source: Herald, The (Scotland)