* IPO to be priced at between 0.7-0.9 times book value
* Valuation set to be between 1.12-1.44 bln stg
(Adds further details; Lloyds, TSB decline to comment)
By Matt Scuffham
LONDON, June 8 Lloyds Banking Group
will on Monday price the sale of a 25 percent stake in its TSB
IPO-LLTS.L business at below its book value, according to
Lloyds will publish the pricing and prospectus for an
initial public offering of TSB shares on Monday, the sources
said. The sale, which will take place before the end of June,
will value TSB at between 0.7 times and 0.9 times its book, or
net asset value of 1.6 billion pounds ($2.7 billion), the
sources said, giving it a valuation of between 1.12 billion and
1.44 billion pounds.
Lloyds Banking Group and TSB both declined to comment.
Lloyds, 25 percent-owned by the government, is obliged by
European competition regulators to sell the 631 branches which
now form TSB as a condition of receiving state aid during the
financial crisis five years ago and therefore must now sell the
whole of TSB by the end of 2015.
Banking industry sources expect Lloyds to sell TSB in three
or four tranches, just as part-nationalised rival Royal Bank of
Scotland did with the sale of its Direct Line
insurance business, which was sold off in stages with each
tranche priced higher than the previous sale.
The initial offer price for TSB reflects a cooling of
investor interest in UK company flotations in recent weeks
following a rush of activity earlier in 2014. Clothing chain Fat
Face pulled its planned London listing last week while shares in
insurance to holidays firm Saga have fallen below
their IPO price.
Nevertheless, Saga's private equity owners are pressing
ahead with plans to float its sister firm, roadside recovery
services and insurance firm the AA.
And TSB's public share sales will still fetch more than
Lloyds' initial plan to sell the branches to the Co-operative
Bank for 750 million pounds. That deal collapsed when a 1.5
billion-pound funding gap at the Co-op emerged.
The bank already has 4.5 million customers and 6 percent of
bank branches in the UK, making it Britain's seventh-largest
retail bank and giving it a headstart over other new entrants.
($1=0.5956 British Pounds)
(Editing by Greg Mahlich)