Lloyds to offload loss-making private equity portfolio

UK banking group Lloyds is intending to sell its interest in a portfolio of private equity-related investments worth over a billion pounds which made a loss last year.

The lender said that it has agreed the sale of the investment, with gross assets of around £1,050m and the transfer of underway commitments which are expected to be £220m at completion, to a fund financed by Coller International Partners for a cash consideration of £1,030m.

"After the reversal of the related available-for-sale reserve, the transaction is expected to result in a pre-tax gain for the Group," the firm said on Wednesday morning.

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Lloyds will continue to manage the fund in return for a management fee, which is thought to be less than £10m a year.

The portfolio generated losses of £40m in 2011 and the bank said that disposal is in line with its strategy of "de-risking its balance sheet and reducing its non-core assets".

The transaction, subject to certain conditions, is expected to complete in the fourth quarter of this year.

BC