Bloomberg News

Lloyds Said to Weigh Sale of $668 Million of LBO Fund Stakes

December 06, 2011

Nov. 28 (Bloomberg) -- Lloyds Banking Group Plc, Britain’s second-biggest government-owned lender, is considering selling about 500 million euros ($668 million) in private-equity assets, three people with knowledge of the plans said.

The portfolio comprises commitments in mostly European buyout funds that Lloyds’s Bank of Scotland unit built to boost its lending relationships with the fund managers, said two of the people, who didn’t want to be identified because the sale process hasn’t been made public. The bank is seeking to free up regulatory capital by selling those assets, they said.

Lloyds, 41 percent-government owned, follows Citigroup Inc., Barclays Plc, Royal Bank of Scotland Group Plc, Credit Agricole SA of France and HSH Nordbank AG of Germany in seeking to sell holdings in leveraged-buyout funds as lenders are forced by regulators to hold more capital in reserve against their riskiest assets. About $10.2 billion has been raised this year by investors, called “secondary” buyers, to acquire holdings in LBO funds from banks reducing their stakes, according to London research firm Preqin Ltd. Secondary investors, including London-based Coller Capital Ltd. and Axa SA’s private-equity unit, are raising another $19.2 billion, according to Preqin.

Lloyds, whose Chief Executive Officer Antonio Horta-Osorio took medical leave this month, took a 20.3 billion-pound ($31.6 billion) taxpayer-funded bailout in 2008 after it acquired HBOS Plc, which owned Bank of Scotland. The bank has since pledged to cut assets. It may sell 1 billion pounds of U.K. mortgages, a person with direct knowledge of the talks said previously.

Ed Petter, a spokesman for London-based Lloyds, declined to comment.

Bank Sales

Recent sales of private-equity commitments by banks include HSH Nordbank’s disposal of a 620 million-euro portfolio to Axa’s private-equity unit and LGT Capital Partners Ltd. in August. In June, Citigroup sold $1.7 billion of leveraged-buyout assets and Barclays sold a 460 million-pound portfolio.

BNP Paribas SA, France’s largest bank, is considering selling a more than $700 million private-equity portfolio, the Financial Times reported today, citing people with knowledge of the situation, which it didn’t name.

--With assistance from Howard Mustoe in London. Editors: Steve Bailey, Stephen Taylor

To contact the reporter on this story: Anne-Sylvaine Chassany in Paris at achassany@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


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