Reports: Lloyds Prices Upsized TSB IPO At 260 Pence/share To Raise £455 Mln

(RTTNews) - British lender Lloyds Banking Group plc (LYG, LLOY.L) is set to launch an upsized initial public offering of 35 percent or 175 million existing ordinary shares of TSB Banking plc at a price of 260 British pence per share to raise 455 million pounds or $774 million, according to several media reports of Thursday. TSB would list on the premium segment of the Official List and the main market of the London Stock Exchange.

The sale of additional shares under an overallotment option could increase the offering size to 38.5 percent of the ordinary shares of TSB Banking. The offering will give TSB a lower market capitalization of 1.3 billion pounds, while Lloyds values the unit at around 1.55 billion pounds in its accounts.

Previously, the banking group said it will sell 25 percent or 125 million of TSB's existing ordinary shares in the IPO at an estimated price range of 220 pence to 290 pence per ordinary share, excluding any exercise of 10 percent over-allotment option.

TSB Banking is the U.K.'s seventh largest retail bank and operates as a separate division within Lloyds Banking Group. TSB was launched as a standalone brand in September 2013.

TSB has a customer base of 4.5 million retail customers, a comprehensive range of retail banking products and a multi-channel, national distribution model, including 631 branches, which equates to around 6 percent of the retail bank branches in the UK.

Lloyds was required by the European Commission or EC to sell the 631 branches that it rebranded as TSB as a condition that was fixed for receiving a government bailout of 20 billion pounds following the bank's troubled takeover of HBOS during the 2008 financial crisis. Lloyds has been grappling with tough times after its merger with HBOS.

The EC initially set Lloyds a deadline of November 2013 for the separation of TSB. However, that deadline was missed after Co-op Bank pulled out of a deal in April 2013 to buy TSB.

In late September, the Sunday Telegraph reported that Lloyds received several approaches from private equity firms, including U.S.-based JC Flowers, that were interested in buying its TSB Business. Lloyds reportedly hired Citigroup and JP Morgan to advise on TSB.

After more than two year of efforts to sell TSB, Lloyds announced on May 27 its intention to float TSB, in a move to meet European Commission's ruling related to state aid. The partly state-owned Lloyds is also required to sell down its remaining stake in TSB before the end of 2015.

LYG closed Thursday's regular trading session at $5.36, down $0.03 or 0.56% on a volume of 8.87 million shares,

LLOY.L closed on the London Stock Exchange at 77.40 pence, down 0.26 pence or 0.33% on a volume of 97.69 million shares.