Following reports last year, the high street bank has decided to sell ony 20% of the wealth manager, out of its 60% share. And assuming all the shares are sold, will retain a 37% stake in the firm – enough to still be able to appoint non-executive directors.
The sale, to institutional investors, will be priced by Bank of America Merrill Lynch and is expected to raise between £350m and £400m for the part taxpayer-backed bank.
St James’s Place’s market cap at close of play on 11 March was £2.73bn, meaning a fifth of the company would be worth nearly £550m, although the firm’s shares have been trading close to their 52-week high of 538p.
Back in November when plans to sell its whole stake in SJP were mooted Lloyds was said to be aiming to raise £1bn while 60% of the company’s shares at the time were worth £1.2bn.
Lloyds has promised to retain its remaining 37% stake in the wealth manager for at least one year. However, it will no longer consolidate SJP’s results in its accounts, which last year bagged it £76m in profits.
In its stock market announcement Lloyds said it expected to increase its core tier one capital by approximately £600m, both through the £350m-£400m gained from the sale and from the "effect of holding the group’s residual stake at fair value".
SJP’s share price has gone from strength to strength from a 52-week low of 301p back in May last year. The firm has bucked an industry-wide decline in approved persons as it continues to take on more and more partners, with an 8% increase in 2012 alone.
Last month SJP announced a 22% increase in funds under management in 2012 and new business profit up 13% at £276m over the same period.
