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Banking, finance, and taxes

Primerica Comes To America, Above Price and Range (C, PRI)

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By Jon C. Ogg Updated Published
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Citigroup Inc. (NYSE: C) or Primerica Inc. (NYSE: PRI)?… The answer is both or either.  The financial supermarket is about to have one less aisle.  Citi is spinning off the life-insurance and mutual-fund brokerage arm via an initial public offering that raised close to $320 million.  The offering will be 21.36 million shares at $15.00 per share, which is a higher share count than the 18 million shares originally projected and above the $12.00 to $14.00 range after the offering saw strong investor demand.

In addition to the spin-off via an IPO, Citigroup will sell 17.21+ million shares of Primerica to private equity firm Warburg Pincus LLC along with warrants for up to another 4.3 million shares at an exercise price per share equal to 120% of the per share public offering price.

Primerica’s 2009 profit was up almost 200% to about $495 million after seeing fewer write-offs, writedowns, and lower charges against its investments.

After the IPO, depending upon overallotments and dilution, Vikram Pandit and friends at Cit will have a stake of 32% to 46% stake.  The total shares outstanding will be 75 million shares.

For those who like to see firms coming public receiving all the proceeds, this may be a different IPO than that.  Primerica receives no new working capital nor any operating capital.

The underwriting group is huge here.  Citi is the book-runner; co-lead managers are UBS, Deutsche Bank, and Morgan Stanley.  Co-managers are KBW, Macquarie Capital, Raymond James, Sanler O’Neill, SunTrust Robinson Humphrey, ING, and Willis Capital Markets.

JON C. OGG

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About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.

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