Wednesday, May 4, 2011

CitiFinancial Sale Weighs on Citigroup

For several months, Citigroup has been seeking a buyer for CitiFinancial, which is the largest consumer finance company in the US. CitiFinancial is reported to have a book value of about $2 billion and some $13 billion in assets. The delay in getting this transaction done is weighing on Citigroup’s stock.

This unit of Citigroup is one of the many trophies Sandy Weill acquired as CEO when he paid $31 billion in Citi stock for Associates First Capital, CitiFinancial’s predecessor. In 2010 Citigroup closed more than 300 CitiFinancial branches, stopped making loans at another 184 and rebranded the remaining 1,500 outlets OneMain Financial.

Four groups had been rumored to be among the interested bidders. One group was comprised of private equity firms Warburg Pincus LLC WP.UL and KKR & Co LP. It was supposedly aligned with Spain's Banco Santander and BlackRock Inc.

A second group of rumored bidders included Brysam Global Partners, Blackstone Group LP, Carlyle Group CYL.UL, Thomas H. Lee Partners THL.UL and Wilbur Ross' WL Ross & Co. Brysam is run by former Citigroup executives, including former COO Robert Willumstad and former Global Consumer Group CEO Marjorie Magner, who know CitiFinancial well.

Other rumored bidding groups had included Apollo Management APOLO.UL and J.C. Flowers; and Clayton Dubilier & Rice and Onex Corp.

Disposition of this troubled consumer-lending unit has dragged on to the point where it appears to be getting shop worn. Terms keep changing as Citigroup attempts to avoid a significant loss on any sale, while at the same time it unloads troubled loans.

On May 4 the New York Post, citing people close to the transaction, reported that the Brysam Group and the Apollo Group have both dropped out of the bidding.

No comments:

Post a Comment