PE owner of OneMain offloads partial stake as subprime lender sale ends

NEW YORK (Reuters) – The majority shareholder of OneMain Holdings (OMF.N) said on Tuesday it would divest part of its stake through an accelerated share sale, following the abandonment of the sale process for all of the subprime lender.

The consumer credit firm, which makes car loans and other personal loans, had put itself up for sale and was running an auction process to solicit takeover bids, a source with knowledge of the matter told Reuters on Oct. 8.

This ended without an agreement with a potential buyer, according to the quarterly earnings of SpringLeaf Holdings, a unit of Fortress Investment Group (FIG.N) which bought OneMain in 2015 for $4 billion.

“(OneMain) recently completed an evaluation of certain alternatives to maximize stockholder value, including a sale of its business,” the company’s results filing said. “The evaluation has concluded and (OneMain) continues to implement its previously disclosed strategies.”

The news sent OneMain’s share price down 12.1 percent on Tuesday to $27.81, valuing the company at $3.76 billion, according to Thomson Reuters data.

The failure of the OneMain sale process coincides with Fortress selling a number of assets in the wake of its takeover by SoftBank Group (9984.T). Among the divestments were Florida East Coast Railway and bond fund manager Logan Circle Partners.

After the market close, SpringLeaf Holdings said in a separate bourse filing that it was selling 10 million shares through a secondary offering being managed by Morgan Stanley (MS.N), the proceeds of which would go to the investment firm.

No price for the shares was given in the statement, although such offerings are usually marketed at a slight discount to that day’s closing price to encourage investors to buy the stock.

SpringLeaf Holdings held around 57 percent of OneMain on Sept. 30, according to its earnings release.

OneMain, which has provided loans and other credit products to more than 10 million customers in 44 states according to its website, was Citigroup’s (C.N) former consumer lending arm, CitiFinancial, until it was renamed in 2011.

The Wall Street Journal in October initially reported the plan to sell the full company, adding that rival lenders and private equity firms were among the parties studying a bid.