UK: Direct Line Group flotation valued at up to �2.9bn
INSURER Direct Line Group will be valued at between �2.4billion and �2.9bn when it makes its stock market debut, Royal Bank of Scotland revealed today.
The state-owned bank said it would price shares in its Churchill and Direct Line insurance business at between 160p and 195p each when it lists next month.
At the mid-point, Direct Line will be valued at �2.66bn, at the lower end of City estimates in what is seen as an attempt to woo investors.
Up to 33% of Direct Line will be offered initially, raising up to �975million for taxpayer-backed RBS if shares are priced at the top-end of expectations.
Paul Geddes, chief executive of Direct Line Group, added: “Direct Line Group’s initial public offering is another exciting step in the transformation of the business, and we look forward to welcoming new investors.”
RBS must sell a majority stake in Direct Line Group by the end of next year and divest of the entire company by the end of 2014 under a European-imposed condition of its �45bn bailout in 2009.
Earlier this month, Direct Line Group announced proposals to axe nearly 900 roles under plans to make �100m of cost savings by the end of 2014.
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Around 500 jobs will go at a call centre in Stockton-on-Tees which the group plans to close, but it said it was unable to say yet which of its 14 others sites around the country would be affected.
That meant further uncertainty for Churchill staff in Ipswich, where the company last year closed its former offices in Crown Street in order to focus operations in the town at its Princes Street site.