Several PE firms are interested in the unit, which lends money to low-income borrowers. Blackstone, the Carlyle Group, WL Ross & Co., Thomas H. Lee and Brysam Group Partners are part of a large group pursuing a bid, according to The Wall Street Journal. Warburg Pincus and J.C. Flowers & Co. are also exploring a deal separately, the story says.
First round bids were due Tuesday, according to The Deal, which first reported the PE firms interest in OneMain.
Citi was one of several financial firms looking to shed assets following its receipt of government funds a couple of years ago. (Anyone remember Primerica? Citi tried to sell it, but failed. It ended up selling a stake in Primerica via an IPO last year.)
Citi, which received $45 billion in late 2008, has been trying to offload CitiFinancial since January 2009. Last summer, Citi planned to spit the consumer lending unit into two segments as it prepared for a sale. One unit holds the branches that make most of the unit’s loans (this is OneMain). The other unit services loans in markets where demand may remain low (this division may also get a new name).
In December, Citi picked OneMain Financial as the new name for the CitiFinancial consumer finance business.
My compadres at Reuters reported last month that Citi was asking book value for OneMain Financial, which could be between $2 billion to $3 billion. The Deal said that OneMain has a book value of more than $2 billion and that Citi was looking to recoup at least that much through a sale.
But Citi might have a tough time getting such a good price. Prospective bidders for OneMain are looking at AIG’s sale of its consumer finance arm, American General Finance, last August. American General has an estimated $2.1 billion book value. Fortress Investment Group bought 80% of AGF and that deal is valued at less than $150 million, according to The Deal. Yowza! Of course, this means that some bidders may use the AGF sale to lowball their offers for One Main.
Officials for Citi declined comment.