Lloyds Sells Above-Target Slice of TSB in IPO

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LONDON (The Deal) -- The U.K.'s Lloyds Banking Group  on Friday, June 20, confirmed it was on track to sell as much as 38.5% of TSB Banking Group in a London IPO after pricing the shares in the upper half of the original range to assign a market value of £1.3 billion ($2.2 billion) to the business.

TSB shares surged on their debut and by mid-morning in London were trading up more than 13% on their IPO price of 260 pence, at 295.25 pence.

The successful IPO underscores expectations that rising central bank rates and a recovering British economy will stoke consumer lenders' earnings. It may galvanize others in a long line of consumer or small business lenders waiting in the wings to stage London IPOs.

JCFlowers & Co. LLC's OneSavings Bank plc became the first of the current crop to list earlier this month when it made its debut with a market value of £413 million. Other lenders working on IPOs include AnaCap Financial Partners-backed Aldermore Bank; the British unit of Banco Santander; Wilbur Ross-backed Virgin Money Holdings; and Shawbrook Bank Ltd., as well as Royal Bank of Scotland Group's Williams Glyn unit.

Lloyds had originally been looking to sell 25% of the spun-off branch network, which it must shed by the end of next year to comply with a European Commission state aid ruling. But it managed to sell 35%, rising to 38.5% if the greenshoe is used. The 260 pence IPO price compares with an original price range of 220 pence and 290 pence, which Lloyds then narrowed to 250 pence to 270 pence.