Lloyds Banking Group Plc, Britain’s biggest mortgage lender, is selling 77 million shares of St. James’s Place Plc as it tries to plug a capital shortfall identified by regulators.
The sale will reduce Lloyds’s holding in St. James’s Place to about 21 percent from 36 percent, the London-based bank said in a statement yesterday. The shares were sold at 580 pence apiece, according to a person familiar with the transaction. They were offered at 570 pence to 585 pence, two separate people said, asking not to be named because the terms hadn’t been announced.
The bank said yesterday it will seek to raise additional capital required by the Prudential Regulation Authority by shrinking its balance sheet and selling assets rather than tapping shareholders. Lloyds acquired the wealth manager as part of its purchase of HBOS Plc in 2008, a transaction that forced the bank to seek a 20 billion-pound bailout that left the government owning 39 percent of the lender.
Yesterday’s disposal will boost Lloyds’s core Tier 1 capital ratio, a measure of financial strength, by 16 basis points, or about 500 million pounds ($753 million), to about 8.26 percent, according to yesterday’s statement. The bank has said it is seeking to increase that to more than 9 percent by the end of the year.
Lloyds advanced 2.3 percent to 62.96 pence in London trading yesterday. The stock has gained 31 percent this year and is trading above the 61 pence price at which the government says it will break even on its stake.
Bank of America Corp. is managing the share sale and is taking orders for the stock through a so-called accelerated bookbuild. The price for the shares will be set at the end of that process, Lloyds said in the statement. The sale comes less than two months after Lloyds sold 102 million shares in St. James’s Place for 510 pence apiece, raising 520 million pounds.
Secondary share sales in Europe, the Middle East and Africa, including accelerated bookbuilds, have raised $42 billion this year, about 90 percent more than what issuers sold in the same period in 2012, data compiled by Bloomberg show.
St. James’s Place, which typically advises clients with more than 100,000 pounds to invest, has more than doubled funds under management over the last five years as economic turmoil and a changing tax burden in the U.K. prompted high earners to look for investment advice. The firm charges annual fees for investing clients’ assets in third-party funds.