Lloyds to raise £400m from St James’s Place

STATE-BACKED bank Lloyds is planning to raise as much as £400m by selling off part of its stake in wealth manager St James’s Place, it said yesterday, shoring up its balance sheet as it prepares for a partial privatisation.

Lloyds will sell around a fifth of the FTSE 250-listed firm to institutional investors, reducing its stake in St James’s Place to 37 per cent. It inherited close-to 60 per cent of the company in 2009 as part of the takeover of HBOS.

The sale, which Lloyds expects to net between £350-£400m, is expected to shore up the bank’s crucial core tier 1 capital buffer to the tune of around £600m, and comes just weeks ahead of a Financial Services Authority report into the health of UK banks’ balance sheets.

The sale of at least 102m shares, which is being run in an accelerated bookbuild by Bank of America Merrill Lynch, would be worth just under £550m at St James’s Place closing price yesterday of 536.5p. Lloyds said yesterday the proceeds would be used for “general corporate purposes”.

Barrie Cornes, an analyst at Panmure Gordon, has previously said that Lloyds’ decision to offload shares in the company would push down the share price in the short term but should benefit investors long term. Shares in the upmarket wealth manager, which has around 140,000 clients and £34.8bn in funds under management, have gained 48 per cent in the last six months, leaving St James’s Place sitting just outside the FTSE 100.