Lloyds' to raise a record $22 bn for rights offering

LONDON: Lloyds Banking Group, the UK’s biggest mortgage lender, plans to raise a record £13.5 billion ($22.3 billion) in the country’s biggest rights offering, selling shares at a 59.5% discount. The bank gained in London trading.

The shares will be sold at 37 pence each compared with Monday’s closing price of 91.47 pence a share, the London- based lender said in a statement on Tuesday. Lloyds will offer 1.34 new shares for every one held in an issue of 36.5 billion shares, it said.

Lloyds announced its intention to raise the money in a fully underwritten rights offering on November 3. The share sale will surpass that of HSBC Holdings which raised £12.5 billion in Britain’s biggest sale in March. The decision is part of the bank’s plans to avoid the government’s Asset Protection Scheme.

Lloyds has 2.8 million shareholders and the biggest number of private shareholders in the UK, accounting for 7.5% of its market value. Shareholders on average own 740 shares and the offering will cost them £366.67 should they take up their rights, the company said.

“The discount is in line with expectations and within the range the company signalled,” said Simon Willis, an analyst at NCB Stockbrokers in London who has a “hold” rating on the stock.

“There’s an element of relief that there is no surprise.” Lloyds rose 1.6% to 92.95 pence at 9:09 am, the only UK bank to rise on Tuesday according to the five-member FTSE 350 Banks Index.