Lloyds Share Price: Lord Davies-Led Group Eyes Government’s Stake

on Jul 8, 2013

iNVEZZ.com Monday July 8th: Lloyds’ share price (LON:LLOY) surged by 2.06 percent to 65.96p on the London opening bell today on media reports that a consortium of investors has made a preliminary offer to acquire the majority of the government’s 39 percent stake in the UK bank.

The group, led by Lord Davis of Abersoch, the former trade minister and Standard Chartered chief executive, is said to be willing to buy up half of the taxpayers’ stake in Lloyds for about ₤10 billion. Corsair Capital, a private equity firm in which Lord Davies is vice-chairman, is also reported as one of the consortium’s members. Details of the bid are still unclear but Lord Davis is said to have offered a structure that will allow the government to benefit from a potential upside in Lloyds’ performance even after the sale of the stake.

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The Sunday Times reported over the weekend that Temasek, a Singaporean sovereign wealth fund with ₤113 billion of assets under management, had also made a preliminary approach to buy 25 percent of the government’s stake for around ₤4.5 billion. The Financial Times quoted a spokesman for Temasek as saying that the company did not comment on market speculation. Another possible play for the state-backed fund is to emerge as part of the Davies-led consortium, especially considering comments it recently made about future investments.

“We are … seeing increasing opportunities in the United States and Europe that are beneficiaries of the growth in other geographies, and are likely to step up our pace of investments in these markets,” Temasek said in its annual review on Thursday last week.
The media reports about possible bids for Lloyds’ shares have come just before the expiry of the deadline for investment banks to submit their applications to handle the sale of the government’s stakes in Lloyds and Royal Bank of Scotland. Investment banks have until today to send their proposals to the UK Financial Investments, the Treasury unit that manages the government’s interests in banks. Barclays, Credit Suisse and UBS have all been named by the press as likely bidders.

!m[Singapore’s Temasek Seen as Another Likely Buyer, The Sunday Times Says](/uploads/story/3733/thumbs/pic1_inline.jpg)
Lloyds shares are trading above the level at which the government says it would break even on its stake after providing a ₤20 billion rescue to the bank in the wake of the financial crisis. Chancellor George Osborne said last month at its Mansion House speech that Britain was ready to start divesting from its 39 percent stake in Lloyds. The Chancellor revealed plans of a multiple tranche sale of Lloyds shares: “For the first block of Government shares, an institutional placement is likely to be the most effective way of managing risk and getting value,” with the remaining shares to be offered later to retail investors (Lloyds share price: UK Government Preparing to Sell Its 39% Stake).
Osborne also pointed out that a sale of the 82 percent stake in RBS was not expected in the near future as the bank was still weighed down by too many poor assets.
**Lloyds’ share price was 65.96p as of 08.07.2013, 08.17 BST.**


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