Citigroup (C) Looks To Cash In On Primerica Through IPO
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Citigroup Inc. (NYSE: C) announced Thursday that it plans to sell shares of its life insurance unit, Primerica Inc., in an attempt to do rid itself of assets outside of its main banking business. The sale is expected to raise up to $100 million for Citigroup.
The decision to sell the shares comes after Citigroup was unable to find a private equity group willing to pay enough for Primerica.
"We believe this is the best separation alternative for this franchise," said Michael Corbat, Chief executive of Citi Holdings, to governing house of the Primerica unit.
The majority of Primerica's insurance risk from policies sold through the end of the year will remain with Citigroup.
While the Company has not determined how much of Primerica it will retain, it was made clear that Citigroup intends to sell the rest of the unit as soon as possible. If the demand is strong enough, the $100 million value for the sale may be increased.
Primerica will use the IPO to incentivize its sales staff with the ability to purchase the company’s shares, as well as create a Primerica equity award compensation program for its employees.
"These incentives will give us new ways to motivate our sales force," Primerica's registration statement said.
A large portion of Primerica's value, $4.6 billion, is in its insurance policies, which will not be included in the initial public offering.
Shares of Citigroup are valued at $4.07 before the market opens today.
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