Citigroup Sells OneMain Instead of Having IPO

By Chris Lange Published Mar 3, 11:35AM EST

Citigroup Inc. (NYSE: C) announced Tuesday morning that it has reached a definitive agreement with Springleaf Holdings LLC (NYSE: LEAF) regarding the sale of OneMain Financial Holdings. The purchase price for the transaction was set at $4.25 billion, and it is expected to close in the third quarter of 2015.

In the fall of 2014, OneMain filed with the Securities and Exchange Commission (SEC) for an initial public offering, but no definitive terms came from it. Originally, OneMain was planned as a spin-off from Citigroup.

OneMain’s network consists of a local front-end workforce of approximately 4,100 employees and is supported centrally by approximately 1,100 employees, with additional functional support provided by Citigroup. The captive insurance business, Citi Assurance Services, or CAS, is staffed by an additional workforce of approximately 215 employees.

Citi Holdings was established in 2009 and consists of businesses and asset portfolios that Citigroup has determined are not central to its core franchise, one of these being OneMain Financial. Since its creation, it has sold over 60 businesses and reduced assets in Citi Holdings by more than $700 billion. At the end of 2014, Citi Holdings’ assets represented approximately 5% of total Citigroup assets, down from a peak of more than 30%.

Citigroup CEO Michael Corbat commented on OneMain:

OneMain is a great business with talented people, who will now become part of a leading personal finance company. While this business didn’t fit our strategy, it serves customers who deserve and need credit. Today’s announcement is a significant milestone in the simplification of our company and we continue to focus on delivering the potential of our franchise for our clients and shareholders.

Shares of Citigroup were up 0.4% at $53.71 in the first two hours of trading Tuesday. The stock has a consensus analyst price target of $60.63 and a 52-week trading range of $45.18 to $56.95.

Springleaf shares shot up 28% at $48.75. The consensus price target is $37.61, and the 52-week trading range is $20.54 to $52.48.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics. Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications. A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.