Lloyds Banking Group (LBG) has agreed to sell its private equity business, earning LBG £332 million in cash for transferring the 40 investments held by its Integrated Finance unit to a new joint venture with Coller Capital in which the bank will hold a 30 percent stake.
Lloyds will retain a stake of about 30 percent in a new joint venture called Cavendish Square Partners LP. “This deal will ensure that we share in any future upside in our investments,” Lloyds Executive Director Truett Tate said in the statement. “The deal with Coller, a leading private equity investor, provides the investee companies with stability and support over the period ahead.”
The 40 company stakes, held through its Bank of Scotland Integrated Finance unit, will be transferred to a venture called Cavendish Square Partners LP, 70%-owned by private equity investor Coller Capital. Lloyds will hold a 30% stake in Cavendish.
Coller’s cash consideration values the portfolio at £480 million, Lloyds said, a small premium to book value. The holdings include stakes in well-known U.K. brands such as Vue cinemas, fitness club chain David Lloyd and shirt retailer TM Lewin.
The sale had been well flagged in the press and was expected to value the portfolio at around GBP500 million. Lloyds said the transaction wouldn’t be material to its earnings.
“Through this transaction, we are crystallizing value in these investments whilst retaining an interest in the investee companies with which we have had positive relationships for several years,” said Truett Tate, group executive director of Lloyds’s wholesale division.
“This deal will ensure that we share in any future upside of our investments. We believe that the deal with Coller, a leading private equity investor, provides the investee companies with stability and support over the period ahead,” he said.
Lloyds said the deal is in line with the group’s strategy of selling assets which are not core to its operations and that over the last 12 months it has sold six businesses, raising over 750 million pounds.