Lloyds to launch TSB share sale amid listing frenzy

LLOYDS bank will next week begin the process of selling 25 per cent of its TSB business through a stock market flotation by end-June, sources revealed yesterday.

Fashion retail chain FatFace has pulled its planned flotation, saying current equity market conditions were against the move

It is understood that the TSB share sale will be for less than its book value – the basic value of the assets – of £1.5 billion, meaning that the bank will take a loss on the sale.

Lloyds was ordered to dispose of TSB, with more than 600 branches, by the European Union as the price of the bank’s taxpayer bail-out in the financial crisis.

It came on a day of further intense activity in the flotations arena as four more businesses joined the stampede for a public listing, including a retail discounter and online property advertising group, with a combined potential value of £4.5bn.

However, worries that the market has hit its peak were fuelled after fashion retailer FatFace pulled its planned float, citing “current equity market conditions”.

That decision by FatFace, chaired by former Marks & Spencer boss Sir Stuart Rose, came 24 hours after holidays-to-insurance company Saga gave warning its planned flotation price would be towards the lower end of expectations.

One analyst commented: “Too many flotations have been priced too aggressively, instead of being ‘priced to go’ leading to a good aftermarket in the shares. We might be seeing the peak for IPOs [initial public offerings], or at least more conservative pricing.”

That caution did not stop the latest flurry, with Liverpool-based discounter B&M European Value Retail, chaired by ex-Tesco chief executive Sir Terry Leahy, the biggest of the entrants.

Sources said the float of B&M, which sells everything from barbecues to trampolines, could value the group at between £2.5bn and more than £3bn.

Zoopla, the online property advertising business in which Daily Mail & General Trust (DMGT) has a near-53 per cent holding, is said to have a likely valuation of about £1bn.

Hungarian low-cost airline Wizz Air confirmed its intention for a public listing with a mooted value of £1.2bn, while boutique fund manager River and Mercantile made up the stock market party with a possible value of up to £200 million. FatFace said it had shelved its float despite strong interest from institutional investors. It said in a stock exchange statement: “Current equity market conditions are the principal factor in the decision.

“The board remains confident in the prospects for the business and will continue to execute the growth plans that are already under way.”

The company had planned to float a quarter of the business in a move expected to raise £110m, giving it a value of at least £400m.

B&M, which operates 373 stores, wants to raise £75m towards reducing debt. Chief executive Simon Arora, who bought the business with his brother Bobby in 2004 and will continue to run it, said: “We have built a high-growth retailer that customers love and which has so much potential still to be realised – approximately 66 per cent of the population does not have easy access to a B&M store and we believe there is room for about 850 stores across the UK.”