LLOYDS Banking Group yesterday launched the biggest cash call the City has ever seen with its long-awaited &pound;13.5bn rights issue, offering new shares to investors at a deep discount of almost 60 per cent.<br /><br />The rights issue has been priced at 37p, a discount of 59.5 per cent to Monday&rsquo;s close of 91.47p. Under the deal, 36.5bn new shares will be issued and shareholders have until 11 December to take up their rights on the basis of 1.34 new shares for every existing share.<br /><br />The new shares represent a staggering 57.3 per cent chunk of the bank&rsquo;s enlarged ordinary share capital, more than doubling the number of Lloyds shares in circulation to 63.66bn.<br /><br />The government&rsquo;s stake will remain at 43 per cent after it took up its rights, investing a further &pound;5.7bn into the bank. Chairman Sir Win Bischoff will also take part in the rights issue, having bought 250,000 shares last week for &pound;225,000.<br /><br />The deal was well-received by the City, as the price represents a 38.6 per cent discount to the theoretical ex-rights price (TERP). It was at the better end of the 38 to 42 per cent discount range previously stipulated by Lloyds, and well above the floor of 15p. <br /><br />Execution analyst Joseph Dickerson said: &ldquo;This indicates Lloyds expects strong appetite for the cash call. Post-rights issue, the risk is primarily a huge economic leg-down, but this is precisely why it makes sense to raise equity capital rather than joining the APS &ndash; it&rsquo;s a better insurance policy.&rdquo;<br /><br />It also marks a bumper pay day for the bank&rsquo;s advisers &ndash; including Merrill Lynch, UBS, Citi, JP Morgan Cazenove, Goldman Sachs and HSBC &ndash; who will share an estimated &pound;350m in fees.<br /><br />The &pound;13.5bn rights issue forms part of a &pound;22.5bn fundraising drive by the bank to allow it to exit the government&rsquo;s toxic loan insurance scheme, the asset protection scheme (APS). <br /><br />Lloyds said on Monday investors had heavily oversubscribed for the remainder of its fundraising, an innovative bond exchange which raised &pound;8.5bn for the bank&rsquo;s coffers. The bond swap was primarily in the form of contingent convertible notes which revert to equity if Lloyds&rsquo; core tier one capital ratio falls under five per cent, meaning that the share capital &ndash; which will already be heavily diluted after the rights issue &ndash; could potentially expand further in the future.<br /><br />Lloyds shares rose 2.6 per cent to 93.85p on the LSE yesterday.