Bailed-out lender Lloyds Banking Group has agreed to sell its private equity business to buyout firm Coller Capital, accelerating its plan to offload peripheral units and refocus on its core lending activities.
Lloyds will get 332 million pounds ($513.5 million) in cash for transferring the 40 investments held by its Integrated Finance unit to a new joint venture with Coller in which the bank will hold a 30 percent stake.
The sale values the portfolio -- which includes holdings in shirt maker TM Lewin and Vue Entertainment cinemas -- at 480 million pounds, representing a small premium to its book value, Lloyds said on Monday.
We wouldn't see a disposal at a small premium to book value as a positive, Seymour Pierce analyst Bruce Packard wrote in a note, adding the private equity investments were likely written down as part of a bumper 13.4 billion pound impairment charge announced last year.
Lloyds, 41 percent state-owned after spiraling bad loans forced it to accept a taxpayer-funded bailout during the financial crisis, aims to shrink its 1 trillion pound balance sheet by a third by winding down or selling unwanted businesses.
Offloading the Integrated Finance business, which Lloyds acquired as part of a government-engineered takeover of troubled rival HBOS at the height of the crisis, brings the number of disposals the bank has made in the past year to six, and takes total sale proceeds to 750 million pounds.
Lloyds said the sale would have no material impact on its overall results, while a spokesman confirmed some investments in the Integrated Finance portfolio have been revised lower.
Lloyds' previous divestments include the 235 million pound sale of asset management business Insight to Bank of New York Mellon last year, and the disposal of its majority stake in motor insurer Esure for 185 million pounds in February.
The bank has also been ordered to sell 600 of its British branches by November 2013 to win European Union approval for the 17 billion pound bailout package it received in 2008.
Lloyds shares were down 1.1 percent at 54.1 pence by 5:55 a.m. ET, while the FTSE 100 <.FTSE> share index was flat.
Coller, a leading player in the private equity secondary market, where buyout firms trade assets with each other, has about $8 billion in funds under management.
In 2004, Coller bought a $900 million portfolio from UK bank Abbey, now part of Santander , and last year it led the purchase of most of 3i's remaining venture portfolio of technology and life sciences companies.
(Additional reporting by Steve Slater; Editing by Erica Billingham)