Osborne says retail investors may join next Lloyds sale

RETAIL investors are likely to join in the government's next sale of Lloyds shares, Chancellor George Osborne revealed yesterday.

On Monday the government began the sale of its stake in the bailed-out bank, raising £3.2bn. Boosted by the unexpectedly swift take-up of the first tranche of shares, Osborne said he would "consider all options for later sales of our shareholding in Lloyds, including a retail offering to the public".

The government sold 4.28bn shares at 75p each in around three hours, reducing its stake in Lloyds from 38.7 per cent to 32.7 per cent. UK investors snapped up half, while 30 per cent went to the US. Temasek bought just under £200m-worth, making the Singaporean sovereign wealth fund the single largest subscriber.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

The second share sale is likely to be even bigger, as the Chancellor looks to sell to retail and institutional investors as well as private ones.

According to The Times, the government's decision not to release the second tranche until 16 December at the earliest came as a surprise to many in the City, who were hoping for an earlier date. As a prospectus will be necessary, and will require up-to-date trading information and guidance on dividends, the sale is more likely to take place in early 2014, after Lloyds publishes its full-year results.

Analysts have speculated that, given the level of investor appetite, the Treasury will then sell the rest of its shares before the 2015 general election.

The successful first round boosted confidence that the British economy is recovering, and Osborne will hope the Conservatives benefit from the feelgood effect at the polls.

He described the Lloyds sell-off as "another step in repairing the banks, it's another step in getting the money back for the taxpayer, and it's another step in reducing our national debt".