It truly is IPO season. Hot on the heels of Jimmy Choo’s (sorry) announcement of its intended flotation on the Footsie (and again…) alongside housebuilder Miller Homes yesterday, among a list of other companies expected to float soon that includes breakdown-service RAC, Royal Bank of Scotland (LSE: RBS) (NYSE: RBS.US) this morning released pricing information for Citizens Bank, the US business that it plans to spin off.
Citizens Financial Group stock will be priced at $21.50, with RBS planning on issuing 140 million shares for an intended $3bn, comprising 25% of the business. However, RBS has also agreed a 15% “over-allotment” option, which means that the underwriters have a 30-day option to buy an extra 21 million shares at the offer price. If exercised in full, this option will lead to an extra 3.75% of Citizens being sold, equivalent to over $450k.
However, the IPO price is less than previously anticipated — originally, RBS had hoped to sell the shares between $23 and $25 — due to doubts surfacing about Citizens’ potential profitability.
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Following government pressure to focus on its UK operations, taxpayer-owned RBS plans to sell 100% of its holding in Citizens by 2016, with Ross McEwan, chief executive officer, commenting:
“The sale of Citizens is an integral part of the RBS capital plan. This IPO represents a key step on the path to full divestment. Selling Citizens will significantly improve our capital position and help us to create a strong and secure bank that can continue to fully support the needs of its customers.”
