After 7 years, it’s finally here
UK Chancellor Osborne has confirmed the launch of a £2bn discounted Lloyds share sale to the public. This follows months of speculation whilst the UK government sold down its £20bn 2008 bailout stake to institutional investors, much to retail investor frustration. The share offer is George’s way of saying sorry.
The offer will be managed by the Treasury on behalf of the government who will determine structure and pricing, however, timing is seen as March 2016, before the end of this financial year. The offer will be the final step in the government’s return of its Lloyds bailout stake to the market wilds.
The Lloyds re-privatization is well on track with a 43% bailout stake having already been steadily reduced to just 11%. While sales have so far netted the UK taxpayer a small profit, and most importantly not harmed the share price, retail investors/taxpayers want their bailout shares back, but with a discount for their trouble.
By our calculations the proposed offer could be very attractive for subscribers. Ensure you don’t miss your chance to get your hands on a discounted slice of a major bank on the mend and on the up.
Register with Accendo Markets now!
Deal of the century
- A public share offer for £2bn in shares (3.6% stake) of Lloyds Bank Group (LLOY)
- The offer is only available to UK residents
- The shares will be offered at a 5% discount to Lloyds’ market price at the time of the offer
- Those applying for £1,000 or less will be prioritized
- Those still holding the shares after 1 year will receive a bonus of 1-for-10 (max value £200)
Huge demand
Expressions of interest have already topped 250,000, meaning the offer is proving immensely popular. This is not surprising given the popularity of the banking blue-chip which can be considered a delayed recovery play after heavy restructuring on an improving UK economy (business, property).
With interest already five times that for the Royal Mail IPO (sold off in Oct 2013 via the biggest UK IPO in 7 years) the strong interest in the Lloyds offer and likelihood for heavy oversubscription suggests potential for a strong reaction to a share offer that will return the bank to full private ownership next year.
Recovery potential
If anything, Lloyds has more recovery potential than Royal Mail, a business suffering from less letters being written, on-line retail using alternative distribution channels and trades unions making life difficult. While higher interest rates could boost Lloyds margins, there may also be light at the end of the PPI tunnel – a potential end in 2018 to claims for mis-sold payment protection insurance (£13bn set aside so far).
Lloyds has already recovered from the financial crisis well enough to post profits of £1.2bn for the first half of 2015 and expectations are for another £1.4bn in Q3 profits at the end of the month. It has also resumed payment of dividends (0.75p, 1% yield) which had been suspended for six years. With banks among the biggest UK Index dividend payers pre-crisis, yields could return to 7%.
