Lloyds makes 13.5bn pound rights issue

Wednesday, November 25, 2009
LONDON: Britain’s Lloyds Banking Group Plc pushed ahead with the world’s largest rights issue on Tuesday, setting a price of 37 pence per share as it taps shareholders for 13.5 billion pounds ($22.3 billion) to avoid costly state support.

The new shares were priced at a 60 per cent discount to Monday’s closing price and are being sold within the range previously indicated by the bank, offering investors a potentially attractive way to play a UK recovery.

“If you believe the UK economy is less bad than some would have you believe, then this is probably the granddaddy of all recovery stocks,” said one major fund manager, who spoke on condition of anonymity. “The fact is, it’s got the funding away, and shown it can be done.”

At 1351 GMT, the shares were trading up 2 per cent at 93.3p, outperforming a flat FTSE index of UK blue chip stocks and a 0.7 per cent drop in the European banking sector. Britain’s largest retail lender said earlier this month it planned to avoid a costly government-backed insurance scheme for toxic loans and would instead turn to investors to raise a total of 22.5 billion pounds to repair a balance sheet badly depleted by the takeover of beleaguered rival HBOS.