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Citigroup Sees Bigger Primerica IPO Bounty

Citigroup shares gained Wednesday as the latest details on plans to IPO its Primerica unit showed the company was set up to pull in almost three times its initial target.



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shares rose Wednesday following news the company's proceeds from the IPO of its Primerica insurance and financial services unit could come in at nearly triple its original estimate.

According to an updated

Securities and Exchange Commission

filing, Citigroup plans to issue as many as 20.7 million Primerica shares (including the over-allotment option) in an offering that could raise up to $289.8 million.

In November, when Primerica

first registered

for the initial public offering, Citigroup was looking to pull in $100 million from the sale.

Expectations are that the shares, to be listed under the symbol 'PRI' on the New York Stock Exchange, will price between $12 and $14 each.

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The plan is for Citigroup to sell up to 18 million Primerica shares in the public markets. The overallotment option allows for the sale of another 2.7 million shares. In total, those figures would represent about 28% of Primerica's common stock. Additionally, in a concurrent private sale, Citigroup is slated to sell private equity firm

Warburg Pincus

roughly 17.2 million shares coupled with warrants to purchase another 4.3 million shares of common stock "at an exercise price per share equal to 120% of the per share public offering price."

Assuming Primerica's IPO prices at the midpoint of the expected range, the purchase price to be paid by Warburg Pincus for each share of common stock together with a warrant to purchase 0.25 of a share of common stock would be $13.36, a value that "reflects a purchase price of 95% of our adjusted pro forma book value per share," Primerica said in its filing.

Following the completion of the offering, Primerica would have roughly 75 million outstanding pro forma common shares, and Citigroup's stake would range from 32% to 46%, while Warburg Pincus's holdings would represent 23% to 33% of the stock.

Primerica distributes financial products to middle-income households in North America through about 100,000 representatives. The company also underwrites term life insurance, as well as offering mutual funds, variable annuities, loans, and other financial products.

Primerica is one of several businesses listed under Citigroup's so-called bad bank, Citi Holdings, which houses assets the company is looking to divest or unwind. The Citi Holdings' portfolio holds a combination of brokerage, insurance, and lending businesses as well as a pool of toxic assets. The company has been successful at selling some businesses, such as its Japanese asset management operations, but not so much with others, like CitiFinancial and Primerica.

The good bank, Citicorp, includes the company's four regional consumer bank businesses, which span the globe, and its Institutional Clients Group, which encompasses its transaction services businesses such as underwriting and corporate lending, as well as its institutional asset management and private banking units.

Citigroup shares tacked on 4 cents to $4.09 in late morning action. Volume of more than 328 million compared to the issue's trailing three-month daily average of 568 million. The stock

took off at the beginning of last week

, and it closed Tuesday's session with just its second finish above $4 in 2010, up 22% year-to-date.


Written by Laurie Kulikowski in New York.