UK got value for money from Lloyds share sale - watchdog
* UKFI reviewed options, got timing right - watchdog
* 230 mln stg shortfall was cost of financial stability -NAO
By Matt Scuffham
LONDON, Dec 18 (Reuters) - The government's first sale of shares in Lloyds Banking Group was managed effectively and provided value for money, Britain's public spending watchdog said on Wednesday.
The endorsement of the sale process by Britain's National Audit Office (NAO) may influence the Conservative-led coalition as it ponders how best to offload its remaining 33 percent stake. It wants to return Lloyds to full private ownership by the time of the next election in 2015.
The government raised 3.2 billion pounds ($5.20 billion) through the sale of a 6 percent stake in the bank in September. It saw the disposal as a milestone in the country's recovery from the 2008 financial crisis during which taxpayers pumped a combined 66 billion pounds ($107 billion) into Lloyds and Royal Bank of Scotland.
The shares were sold to financial institutions such as pension funds and insurers via an 'accelerated bookbuild' - enabling the shares to be placed in the period between the market closing and re-opening the following day.
Amyas Morse, head of the National Audit Office (NAO), said that UK Financial Investments (UKFI), which managed the sale for Britain's Finance Ministry, had reviewed its options thoroughly and got its timing right.
"The sale took place when the shares were trading close to a 12-month high and at the upper end of estimates for the fair value of the business. Furthermore, the share price in trading after the sale has remained steady," Morse said.
The government, which retained 33 percent of the bank, sold the shares at 75 pence per share, above the 73.6 pence at which they were purchased. But taking account of the cost of borrowing the money to buy the shares, taxpayers had lost at least 230 million pounds, the watchdog said.
It said that loss should be see as part of the cost of securing financial stability during the crisis, rather than any reflection on the sale process.
UKFI agreed to a lock-in which prevented it from selling any more shares in Lloyds for at least 90 days, which is due to expire on Wednesday. It is not expected to sell any more shares until after the bank's full-year results in February.
The government is also considering selling some of the remaining shares to private retail investors.
Shares in Lloyds closed on Tuesday at 76.2 pence, valuing the government's remaining shares at close to 18 billion pounds.
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