Citi's Primerica IPO Points to Strategy Shift

NEW YORK (TheStreet) -- Citigroup's (C) decision to go the IPO route with Primerica may signal a shift in its strategy for disentangling itself from non-core and troubled businesses. Rather than settling for whatever offers are available, it seems to have decided the public markets also present a viable option.

Citi announced plans for the IPO of its financial services and insurance subsidiary, Primerica after Thursday's closing bell. In its S-1 filing with the Securities and Exchange Commission, the Duluth, Ga.-based firm said it was seeking to raise as much as $100 million through the sale.

What's interesting is that Primerica is one of several businesses listed under Citi's so-called bad bank, Citi Holdings, a portfolio that is essentially full of assets Citi is, for the most part, seeking to unload for both quality and strategic reasons.

The unit -- separate from its core Citicorp operations -- holds a combination of brokerage, insurance, and lending businesses as well as a pool of toxic assets. Citi has been successful at divesting some operations, such as its Japanese asset management unit, and part of its Smith Barney brokerage business through a joint venture with Morgan Stanley (MS), but it's been rumored that finding buyers for other businesses like CitiFinancial and Primerica has been tough.

"They must have shopped it around to competitors and the best bid offer was in their opinion was less than their perceived value of the business," says Harlan Platt, a finance professor at Northeastern University. "The market appears to be gaining comfort in buying IPOs based on recent experience including the Hyatt IPO and they may suspect that they would do better through this route. Hyatt is a good brand. Primerica is a good brand."