24th Sep 2014 05:52
LONDON (Alliance News) - Commercial bank holding company Citizens Financial Group Inc, owned by British lender Royal Bank of Scotland Group PLC, priced its initial public offering of 140 million shares at USD21.50 per share, raising gross proceeds of about USD3 billion. The pricing was below the company's estimated range of USD23 to USD25 per share.
The IPO immediately values Citizens Financial at about USD12 billion. Citizens Financial shares of common stock are expected to begin trading on the New York Stock Exchange under the ticker symbol 'CFG' on Wednesday.
The investor family was critical about the prospects of the IPO amid the slow growth of the US economy, including the Northeast and mid-Atlantic region, where Citizens Financial primarily operates.
RBS was forced to cut the price due to the lack of demand amid market skepticism about the overall lackluster performance by other large financial sector IPOs and a mixed performance of bank stocks in 2014. However, the year was strong for IPOs from other sectors.
The muted response to the Citizens Financial IPO comes on the back of last week's highly successful and historic USD25 billion IPO of Chinese e-commerce giant Alibaba Group Holding Ltd which also listed on the NYSE.
However, the Citizens Financial IPO is the largest among US banks since Goldman Sachs Group Inc's market debut in 1999.
According to Dealogic, it is also the second-largest US IPO this year after Alibaba and the third-largest bank IPO in nearly two decades. It trails only CIT Group Inc's 2002 IPO that raised USD4.9 billion and Goldman Sachs' USD3.7 billion IPO in 1999.
Morgan Stanley & Co. and Goldman, Sachs & Co, are acting as joint global coordinators, while J.P. Morgan Securities is acting as joint book-running manager for this offering.
The British-owned American bank said the shares of common stock were offered by the selling stockholders, and that it will not receive any of the proceeds from the sale. The selling stockholders have also granted the underwriters a 30-day option to purchase up to an additional 21.0 million shares to cover over-allotments, if any.
Providence, Rhode Island-based Citizens Financial is the 13th largest retail bank holding company in the US, with USD130.3 billion of total assets as of June 30, 2014 as well as nearly 1,230 branches and over 3,215 ATMs across 11 Northeast and Midwest states in the US The company generated revenues of USD5.0 billion for the twelve months ended June 30, 2014.
RBS said last year that it would sell 20 to 25% of Citizens by the end of 2014 through an US IPO, and planned to fully divest the business by the end of 2016. This will pave the way for the return of billions of dollars of capital to the UK regulators that RBS received in a bailout in 2008.
RBS bought the Citizens in 1988 for USD440 million to expand operations around the globe, but has been under pressure from UK regulators to sell its foreign holdings and non-core assets ever since it was bailed out by the UK government. RBS had pledged to list Citizens Financial and refocus on its British operations.
The move to spin-off Citizens into a standalone company through an IPO came as part of a broader effort by its owner RBS, 80% owned by the British government, to bolster its capital in the event of another financial crisis amid pressure from British regulators. RBS was once a failing bank that was bailed using nearly USD70 billion of British taxpayers' money.
RBS closed Tuesday's regular trading session at USD11.69, down USD0.05 or 0.43% on a volume of 0.67 million shares.
Copyright RTT News/dpa-AFX
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