Citigroup (NYSE: C) continues to restructure the firm as it continues to rise out of the ashes. The firm is rapidly shedding assets and building liquidity, which should bode well for it in the coming years. The financial behemoth became too large and slow to respond to the changing landscape, and are now continuing to make major changes to the business model. The latest news comes in regards to Primerica, the financial giant’s life insurance unit that produces stable revenues, but is outside its core banking business.
Concurrent to the IPO, Warburg Pincus LLC, a private equity fund, will purchase 17.2 million of Primerica common stock, and warrants to purchase about 4.3 million additional shares from Citigroup. After the offering, Citigroup will own between 32 percent and 46 percent of Primerica, and Warburg Pincus will own between 23 percent and 33 percent.
Vikram Pandit, Chief Executive of Citigroup is under mounting pressure to turn the company around, following multiple quarters of losses summing to several billions of dollars since 2008. Many assume that when the market is stable, Citi will divest the remaining interest in Primerica, which could be a lucrative transaction for the firm in the future. During 2009, the firm tried to sell the whole Primerica division, but was unable to find a buyer willing to pay enough.
In regulatory filings, it is noted that Primerica expects to offer 18 million shares at a price between $12 and $14 per share, and expects to raise about $100 million from the IPO. The company is expected to trade on the New York Stock Exchange under the symbol “PRI”, and Citigroup Global Markets Inc. is acting as the lead underwriter in the syndicate. Citigroup will get all of the net proceeds from the offering, which may help appease the investor community that was pounded by the decline in Citi’s shares.
Will the new Citigroup be lean and mean, or will they turn into a shell of their former selves? Only time can tell, but based on the tea leaves, it seems Sandy Weill’s dream of the financial supermarket may be gone for good (unless Jamie Dimon successfully resurrects the model at JPMorgan Chase, NYSE: JPM).
