Lloyds Banking Group is to sell off a bigger stake in TSB than expected in response to "significant investor demand".Lloyds, which is 25%-owned by the taxpayer, is now planning to offload 175m shares, or 35%, in the 631 branches that form TSB when conditional dealing of the high street banking arm starts on Friday. It had originally intended to sell 125m shares, or 25%.What's more, the offer price for the initial public offering (IPO) will be 260p, above the mid-point of the range of 220-290p set out earlier this month.The price values TSB at £1.3bn and is expected to see Lloyds raise £455m.Lloyds' Chief Executive António Horta-Osório said that the IPO of TSB is an "important further step for Lloyds Banking Group as we act to meet our commitments to the European Commission"."The significant investor demand for shares in TSB, which reflects investors' confidence in the prospects for the business, has meant that we have been able to set the offer size at 35%," he said.Investor appetite for the IPO has increased since Bank of England Governor Mark Carney last week signalled that interest rates could rise sooner than expected. It is thought that TSB's £17.7bn mortgage portfolio will benefit from higher rates.While the bank will still likely take a hit on the sale - having recently valued TSB at £1.55bn in its accounts - the sell-off of a bigger stake may come as a relief to investors following the botched disposal to the Co-operating Bank that fell through last year.Lloyds must get rid of its remaining shares in TSB by the end of 2015, according to the conditions of its bailout in 2009. It is subject to a 90-day lock-up agreement which starts at the time of the IPO.BC