Lloyds to raise £332m in minority stake sale

The stakes were bought by Halifax Bank of Scotland before Lloyds took over the struggling bank.

The 40 investments include minority stakes in two Doncaster-based groups, social regeneration company Keepmoat and building products group Polypipe.

Lloyds is selling the 40 private equity investments to a new joint venture called Cavendish Square Partners.

The joint venture will be majority owned by private equity firm Coller Capital, which will own 70 per cent, and Lloyds will own the other 30 per cent.

The deal values the assets at 480m, which Lloyds said was a small premium to the current market price.

Lloyds said all the stakes are minority ones, but refused to disclose how big they are.

The 40 investments include Sir Terence Conran's restaurant empire D&D, gym chain David Lloyd and newsagent and convenience group Martin McColl.

Lloyds has now raised more than 750m from asset sales to shore up its finances following the rescue of HBOS and subsequent taxpayer bail-out.

But it still has the troubled property and housebuilding portfolio, which has landed the group with hefty writedowns since the credit crunch. These investments stakes include housebuilder Crest Nicholson.

Coller was chosen as Lloyds' partner after a competitive bidding process. Jeremy Coller, chief investment officer of Coller, said the group would work with Lloyds to ensure the investments "get access to the resources they need to reach their full potential".

Analyst Bruce Packard at Seymour Pierce was critical of the deal. He said: "We wouldn't see a disposal at a small premium to 'book value' as a positive.

"Presumably the investments were written down aggressively in the first half of last year, when Lloyds took a 13.4bn impairment charge for HBOS assets which were 'outside the traditional Lloyds low-risk appetite'."

Lloyds, which is 41 per cent state-owned, aims to shrink its 1 trillion pound balance sheet by a third by winding down or selling unwanted businesses.

Lloyds' previous divestments include the 235m sale of asset management business Insight to Bank of New York Mellon, and the disposal of its majority stake in motor insurer Esure for 185m. It also sold Halifax Estate Agents to York-based LSL Property Services for just 1 and HBOS Employee Equity Solutions to Computershare for 40m.

Lloyds said the sale would have no material impact on its results.

The bank has also been ordered to sell 600 of its UK branches by November 2013 to win European Union approval for the 17bn bailout package it received in 2008.

Bank of Scotland provided backing for the 783m management buyout of Keepmoat in 2007 using an integrated finance package of debt and equity.

A spokesman for Keepmoat said: "We are very comfortable with the new joint venture arrangement between Lloyds Banking Group and Coller Capital. We remain totally focused on building on our success by growing our regeneration product and services offering and expanding the Keepmoat Group into new geographical markets."

Division's 75m worth of deals

Lloyds Banking Group's corporate division in South and East Yorkshire has completed 18 deals totalling 75m since January.

Tim Pryor, who leads the team which was launched in July last year, said the deals spanned a number of sectors including construction, wholesale, retail, manufacturing, food and IT.

The team, which comprises six staff in Hull and 13 in Sheffield, has over 100 corporate customers including Arco, Cranswick, Fusion, Gilders.

It was created last year when the bank decided to split its Yorkshire corporate customer support into two areas. North and West Yorkshire is led by Shaun Ellenthorpe.

Mr Pryor said: "Both East and South Yorkshire have strong manufacturing bases to drive further market share."

Over the next nine months, the bank said it plans to complete 29 transactions totalling 300m.