Banking and finance consultant for Carey London Ltd, David Mills talks about the large investor appetite for Lloyds Banking Group
Lloyds has significantly upped the amount of shares for sale as a result of big investor demand on the stock market, says David Mills, a London-based banking and finance specialist, who watched the banks’ recent take-over of HBOS and Castle Finance.
The bank, which is owned 25% by the tax-payer, has agreed to sell a 35% stake in company TSB – a 10% increase on the original plan. This is in direct correlation to the hefty demand shown by the bank’s stock market debut this week, which has been calculated to be ten-times oversubscribed.
“Shares were priced at 260p a pop,” says David Mills, who has helped on many mergers and acquisition deals, as well as managed asset based finance, during his lengthy banking career. “This gives TSB a market value of £1.3bn. That’s incredible.”
Its spotlight moment comes after the business was told to sell 631 branches in 2009 by European regulations, and an order to sell its remaining shares in TSB by late 2015. “This sale will see Lloyds Banking Group net profit £455m – with 30 per cent of its shares being sold to investors in retail. These investors were unable to sell or buy shares in the company on Friday, open only to institutional investors under defined trade rules. The shares ended nearly 12% higher, at 290 pence.
CEO of TSB Bank recently told reporters that he was ‘delighted’ by the huge demand by investors to grab the TSB shares.
“It depicts a large appetite for a bank with a difference,” says David Mills. “One that is based on high street, not Wall Street, trading, tactics and ethos. One whose core focus is on customer service.
“This successful, initial public offering is a huge step forward for the Group,” adds the banking specialist. “It shows that it is committed to completing its duties to the European Commission. This bank is presenting itself as an institution that has a strong capital baseline, significant economic protection for the future and healthy liquidity. Its national network makes it ever more attractive.”
The bank’s leader said TSB was now focused on delivering banking and finance strategies to bring more competition across Britain’s banking sector. Lloyds Banking Group had initially wanted to sell the 631 stores to Co-Op Bank. However, the deal collapsed following a black whole of £1.5bn was discovered on Co-Op Bank’s and Castle Finance Direct balance sheet.
“TSB has nearly five million customers in the UK. This makes it the seventh largest retail banking name in the UK, and is one that will continue to grow. It will become an even larger player in the market over the next few years, with a finance strategy to grow by 2% in the next five years,” says David Mills.
The shares will be open to retail investors from the 25 June 2014.
Other Stories – HBOS Corruption – 328 Group – Corporate Jet Services