Lloyds share sale sparks Richard Buxton interest

Ultra-aggressive Richard Buxton has said he is poised to pounce on the government’s planned sale of its stake in Lloyds Banking Group, which is already his biggest holding.

Mr Buxton’s interest in the share sales, which the government is expected to offer at a discounted rate, comes after Invesco Perpetual rejected reports that its star manager Neil Woodford was in talks to buy a large stake in the bank.

“Based on conversations I have had with advisers [connected with the flotation], I am pretty confident that if they look to sell 10 per cent of the government’s stake it will be hugely oversubscribed,” said UK equity star Mr Buxton, who moved from Schroders to Old Mutual Global Investors a month ago.

Article continues after advert

“If there is a modest discount to the share price, it may be an attractive opportunity to top up.”

Chancellor George Osborne last week continued to firm up details of the government’s plans to sell its 39 per cent holding in Lloyds by the end of 2014, with an initial sale to institutional investors expected to take place early next year.

Retail investors are then expected to be offered shares in a deal that will resemble the 1980s sell-offs of BT and British Gas.

Mr Buxton said he expects shares in Lloyds to rally “substantially” due to strong demand from new investors as the share sales take place.

“I’ve long been of the view that it is a long, slow, painful process of recovery but that they are getting there. It is not done yet, but I can see considerable further upside,” he added.

Lloyds is the biggest holding in Mr Buxton’s £279.1m Old Mutual UK Alpha fund, at 4.4 per cent of the portfolio, according to its May 31 factsheet.

The lender received a £17bn bailout from the government in October 2008 at the height of the banking crisis as the bank’s loan books turned sour and its share price plummeted.

Its shares have climbed 33.2 per cent this year, but they are still 11 per cent lower than when the government bought in.

Reports last week said that Mr Woodford, manager of Invesco Perpetual’s giant Income and High Income funds, was set to take a substantial stake in Lloyds in a move that would have reversed his longstanding bearish stance on banks.

But a spokesperson for Invesco Perpetual denied the story, telling Investment Adviser: “Neil Woodford has no intention of buying a stake in Lloyds or any other UK high street bank at the present time.”

Meanwhile, Mr Buxton said he had a smaller holding in the Royal Bank of Scotland, which was granted a £20bn bailout in October 2008, but said the bank “always had a harder road to travel to reach full health”.