Citi Sells OneMain Financial to Springleaf

By Sang Hyun Park

On March 3, Citigroup announced that it has agreed to sell OneMain Financial Holdings Inc., its consumer lending unit, to Springleaf Holdings for a purchase price of $4.25 billion. The decision has been a culmination of Citi’s yearlong process of divesting its business in the hopes of an initial public offering or outright sale.

OneMain has been Citigroup’s most profitable unit, with returns on the unit’s nearly $10 billion assets at 6.7 percent.

The deal effectively makes Springleaf the biggest sub-prime lender in the country. Analysts at AllianceBernstein L.P., a global asset management firm, predict that the acquisition could earn the business $574 million this year. The sale is also expected to mark a positive turn for Citigroup in the short to medium term. Citi CEO Michael Corbat described the sale as a “significant milestone in the simplification of [the] company.” In addition to an immediate boost in income, it also reduces the size of its assets and frees up capital that could be used to reinvest or increase returns to shareholders.

Bank of America, Credit Suisse, and Goldman Sachs handled the deal on Springleaf’s behalf, while Citi’s advisory group managed the company’s part of the deal. The deal will go into effect in the third quarter once regulatory matters are resolved.