THE United Kingdom government sold a STG3.2 billion (RM16.57 billion) stake in Lloyds Banking Group plc, a first step towards full private ownership of Britain's largest mortgage lender.
UK Financial Investments Ltd, which oversees the government's holding in the bank, sold 4.28 billion shares, or about six per cent of the company's issued stock, to money managers, the London-based body said in a statement. The shares were priced at 75 pence.
Chancellor of the Exchequer George Osborne could use the proceeds to fund tax cuts or more spending before the next general election, due in 2015. He has said Royal Bank of Scotland Group plc, which received a STG45.5 billion bailout, is still burdened by too many poor assets to be sold.
"When you look at the share price, the government has been pretty smart in terms of timing," said Ian Gordon, an analyst at Investec plc in London who has a sell rating on the stock.
"It's also a digestible amount."
The stock has climbed 61 per cent this year to 77.4 pence in London yesterday, above the 61 pence the government says it will break even after providing a STG20 billion rescue in 2008.
Lloyds will be the largest sale of secondary shares since a STG5 billiontransaction in Italy's Enel SpA in August 2004, according to data compiled by Bloomberg. Volumes of the sales doubled to nearly US$67 billion (RM218 billion) this year, data shows.
The government was seen selling as much as STG5 billion of Lloyds shares, three people with knowledge of the plan said in July. The transaction will reduce the government's stake in Lloyds to 32.7 per cent from 38.7 per cent.
JPMorgan Chase & Co, Bank of America Corp and UBS AG are managing the offering while Lazard Ltd is acting as capital markets adviser, according to a statement from UKFI. The government still owns 81 per cent of Edinburgh-based RBS.
"We want to get the best value for the taxpayer, maximise support for the economy and restore them to private ownership," the Treasury said in a statement yesterday.
"The government will only conclude a sale if these objectives are met."
UKFI and the Treasury have agreed not to sell any more Lloyds shares for 90 days without the written consent of a majority of sale managers, according to the statement.
"Lloyds is well-liked and the government selling out will only be good news," Alan Beaney, who manages STG57 million, including Lloyds shares, at RC Brown Investment Management plc in Bristol, England, said before the announcement. Bloomberg