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The sale of OneMain, which Citigroup has been
seeking to hive off since 2011, is a major step in the No. 3
U.S. bank's plan to sell unwanted assets and focus on wealthier
clients.
Citigroup's shares were up nearly 1 percent at $54 in premarket
trading on Tuesday.
OneMain, which had assets of $9.72 billion at the end of
September, provides personal loans for meeting unexpected
expenses such as medical bills or car repairs and for buying
small-ticket items such as refrigerators.
The business is part of Citi Holdings, which Citigroup created
during the financial crisis to park assets that it wanted to
eventually divest or wind down.
Citigroup had reduced Citi Holdings' assets to $98 billion, or 5
percent of the bank's total assets, by the end of 2014, from a
peak of more than $875 billion, or more than 30 percent of
assets.
Citigroup will use a part of the proceeds from the sale of
OneMain to retire certain funding that currently supports Citi
Holdings, the bank said in a statement.
The bank said the sale, along with retirement of the related
funding, is expected to add about $1 billion to earnings before
income taxes.
OneMain had filed for an initial public offering in October, but
an outright sale was always Citigroup's preferred choice.
However, potential buyers had trouble raising funds and
Citigroup was unwilling to sell at the prices offered at the
time.
Springleaf, majority owned by Fortress Investment Group LLC <FIG.N>,
had prevailed over other bidders, including private equity
firms, in an auction for OneMain, Reuters reported in February.
OneMain and Springleaf are the only sizable national
participants in the U.S. consumer lending industry serving the
large and growing population of non-prime customers.
The combined company will have $15 billion in assets and operate
through nearly 2,000 branches across the country.
The transaction is expected to add to Springleaf's after-tax
earnings in 2015, the company said in a statement.
Bank of America Merrill Lynch, Barclays, Credit Suisse and
Goldman Sachs are Springleaf's financial advisers, while Skadden
Arps Slate Meagher & Flom LLP is legal counsel.
Citi is OneMain's financial adviser and Davis Polk & Wardwell is
its legal adviser.
(Reporting by Avik Das in Bangalore; Editing by Savio D'Souza)
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