Citigroup (C) to Pursue Sale/IPO of OneMain; Deal Could Boost TBV/Share by $1

Citigroup (NYSE: C) is planning to file an IPO for its OneMain Financial consumer-lending arm by the end of the month, according to reports over the weekend from Bloomberg. At the same time the company will solicit offers from any potential buyers of the unit.

OneMain is said to be worth at least $4 billion, according to Bloomberg sources.

Newly-public SpringLeaf Holdings (NYSE: LEAF) is said to be interested in OneMain and the two sides held talks in recent months although talks remained informal.

Commenting on the news, BofA Merrill Lynch analyst Erika Najarian estimate a valuation range for OneMain of $4-5 billion, translating into net after-tax proceeds of $2.0-2.6 billion for Citi and a boost to TBV/share of about $1. Also a potential sale or IPO would boost Basel 3 core tier 1 common equity by 32bp to 11.0%.

"While it appears that C is pursuing both the sale and IPO path concurrently, we believe C could potentially command a slightly better valuation in a sale, given cost savings to certain potential buyers," the analyst said.

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