LONDON ( The Deal) -- The British government's UK Financial Investments Ltd. said Tuesday, Sept. 17, it had sold a 6% stake in Lloyds Banking Group (LYG - Get Report) for just over over 3.2 billion pounds ($5.1 billion).
Monday's long-awaited accelerated bookbuilding exercise to institutional investors marked UKFI's first selldown of shares in Lloyds, which the previous Labour government had rescued in January 2009 after arranging for it to take over troubled peer HBOS.
Shares changed hands for 75 pence, above the "blended" 73.6 pence which the government is estimated to have paid for its stake, meaning the Conservative/Liberal Democrat coalition government should be able to declare it has made a profit of about 60 million pounds on the transaction. The stock was priced at a 3.1% discount to Monday's close. Before Monday, Lloyds shares had risen about 25% in the past three months and are close to a five-year high.
The sale leaves UKFI, the vehicle which manages state banking holdings accrued during the credit crisis, with 32.7% of Lloyds. UKFI is bound by a 90-day lockup on its remaining shares but the restriction can be waived with the written consent of a majority of the investment banks selling the shares. The state is seen likely to offer a second tranche to a wider pool of investors early next year."We regard the government's timing as impeccable, and it appears credible to suggest that it could yet be out in full by the election," noted Investec Bank analyst Ian Gordon. The national elections will take place in May 2015 and the coalition government had been eager to start the Lloyds selloff well before. Chancellor of the Exchequer George Osborne called the sale "another step to repair what went so badly wrong in the economy" under the previous Labour government. Bank of America Merrill Lynch, JPMorgan Cazenove Ltd. and UBS handled the placing. Charlie Foreman and William Rucker of Lazard and Slaughter and May advised on the placing. Lloyds shares in early trading were down 1.56 pence at 75.80 pence. --Written by Laura Board