Warburg Pincus May Buy Back $230 Million of Primerica Stock

NEW YORK (Reuters) – The private equity firm Warburg Pincus LLC plans to buy as much as $230 million of common stock in Primerica Inc from Citigroup Inc (C.N) in connection with the bank’s planned initial public offering for its life insurance unit.

The planned purchase was revealed in a U.S. Securities and Exchange Commission filing on Tuesday.

Warburg Pincus also has a right to buy another $100 million of Primerica shares at the IPO price, and a warrant to buy a number of additional shares, equal to 25 percent of whatever number it commits to purchase, the filing shows. It also would be entitled to two board seats, the filing shows.

Citigroup said on Nov. 5, 2009 it planned to sell Primerica shares, after failing to find a buyer for the entire business that was willing to pay enough.

The third-largest U.S. bank is trying to shed assets, including Primerica, that are not part of what it considers its core banking operations.

After a few taxpayer bailouts, the federal government at year end owned a roughly 27 percent stake in the New York-based bank. Many assets being sold were assembled by former Chief Executives Sanford Weill and his successor Charles Prince.

Primerica said it insures more than 4.3 million people, mainly from households with annual incomes between $30,000 and $100,000, and more than 2 million clients with investment accounts.

The Duluth, Ga.-based company said it has roughly 100,000 sales representatives. Its life insurance business was founded in 1977, but the company also has roots in American Can Co, a food packager built by the financier Gerry Tsai.

According to the filing, Warburg agreed not to control more than 35 percent of Primerica’s voting power or a 45 percent equity stake. The firm has made investments in other financial services companies including the Connecticut lender Webster Financial Corp (WBS.N) and the bond insurer MBIA Inc (MBI.N). (Reporting by Jonathan Stempel; Additional reporting by Paritosh Bansal, editing by Leslie Gevirtz and Carol Bishopric)