Singapore’s sovereign wealth fund has emerged as a potential candidate in the race to buy part of the UK government’s stake in Lloyds Banking Group.
Temasek, which has a portfolio value of about £113 billion, owns 18 per cent of Asia-focused rival Standard Chartered and is understood to be considering a £4.5bn bid for about 10 per cent of Lloyds.
Lloyds is 39 per cent owned by the taxpayer and UK Financial Investments, which manages the government’s holding, has invited investment banks to set out how they would handle the sale of the stake. Interested parties have until today to submit their full proposals.
Temasek could face a rival move from former trade minister Lord Davies of Abersoch, who is believed to be behind a £10bn approach for up to half of the taxpayer stake in Lloyds.
The Labour peer and former Standard Chartered chairman, who is also vice-chairman of private equity firm Corsair Capital, is understood to have been working on the plan for a year. Institutional investors and sovereign wealth funds are said to have been approached about joining the consortium in a deal that would help the government kick-start a full-scale privatisation of Lloyds.
Corsair is also said to be part of another consortium, backed by the investment arm of the Church of England, seeking to buy 316 Royal Bank of Scotland branches. RBS was ordered by the European Commission to sell the branches in return for its £45bn taxpayer bailout. Talks with Santander broke down last year.
Chancellor George Osborne said in his Mansion House speech last month that the Treasury was “actively considering” steps to return Lloyds to the private sector. He said the first sale of shares in the bank was likely to go to institutional investors, although he was considering a retail offering to the public for later tranches.
The government bought shares in Lloyds and RBS at the height of the financial crisis in 2008. A sale in its stake of the latter, which is 81 per cent owned by the taxpayer, was said by the Chancellor to be “some way off”.