TSB boss defends float amid fears of investor fatigue
Tuesday 27 May 2014
TSB chief executive, Paul Pester, has defended the timing of its IPO amid fears of investor fatigue, but insisted that 'the decision ultimately is for Lloyds'.
“We have had two rounds of meetings with potential investors and the definite view from the US and Far East is that we have real exposure to the UK economy and that it is growing ahead of Europe,” said Pester.
“But the decision ultimately is for Lloyds and market conditions will affect that.”
His comments came as Saga, last week’s big initial public offering, fell to a discount. The shares dropped to 180.25p, 2.5 per cent below Friday’s offer price of 185p.
Lloyds has to sell the whole of TSB by the end of 2015 under orders from the European Commission because of its £20 billion taxpayer bail-out.
Today Lloyds said it wants to sell 25 per cent of its share of TSB next month in a move which could value it at more than £1 billion and up to £1.5 billion.
But investor demand for new issues appears to have stalled. Fat Face withdrew a planned £400 million float last week but cut-price retailer B&M, property website Zoopla and low-cost airline Wizz air are going ahead with IPOs which value them at some £4 billion.
In the financial sector, the Government is still keen to sell more of its remaining 25 per cent stake in Lloyds this year, Royal Bank of Scotland could sell part of Williams & Glyn’s and Georgian bank TBC today said it will be valued at some $700 million (£416 million) when it floats on the London market next month.
Today also saw Euronext, the pan-European stock exchanges group, announce its plans for floating, which could value it at some €1.5 billion (£1.2 billion). Pester sought to distance TSB from some other floats and existing listed banks.
“We are about growing the business,” he said. “We are very different to some of the large-scale retail banks who pay large dividends because they are not growing. We have 6 per cent of the branches in the UK but only 4.2 per cent of the current account market. But since we launched our latest account the number of people switching to us has risen four or five times.”
But he also admitted TSB is unlikely to pay a dividend until early 2018 as it concentrates on growth. It is the seventh-largest bank in the UK with 4.5 million customers and 631 branches.
Lloyds has guaranteed to cover any costs of mis-selling or other historical issues incurred by TSB up until the time of its flotation.
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