The U.S. Treasury and the Obama administration is making final plans to sell its 27% ownership stake in Citigroup (NYSE: C). At Citigroup’s current stock price, the sale would net the federal government more than $8 billion in profit, which would be by far the most profit that the government made on any of the firms that accepted bailout funds and would be the second largest stock sale in history.
The federal government invested $25 billion in Citigroup which has since converted into a 27% ownership stake in the company. The investment is now worth $33 billion on paper.
The potential sale of Citigroup shares would mark the second largest stock sale in history, only second to a 1987 stock offering by Japan’s Nippon Telegraph which raised $36.8 billion in 1987, according to Reuters.
Many of the country’s leading financial firms including JP Morgan, Morgan Stanley and Goldman Sachs are hoping to secure the position as the deal’s underwriters in hopes of collecting fees from investors that buy Citigroup shares and having the prestige of managing such a historic stock sale. To improve their odds, some of the banks, including Goldman Sachs, are offering their services to the Treasury Department at almost no cost, according to the Washington Post citing anonymous sources.
If the U.S. Treasury’s sale proceeds as planned, Citigroup will be able to cut nearly all of its connection to the government’s Troubled Asset Relief Program.