Primerica Comes To America, Above Price and Range (C, PRI)

Citigroup Inc. (NYSE: C) or Primerica Inc. (NYSE: PRI)?… The answer is both or either.  The financial supermarket is about to have one less aisle.  Citi is spinning off the life-insurance and mutual-fund brokerage arm via an initial public offering that raised close to $320 million.  The offering will be 21.36 million shares at $15.00 per share, which is a higher share count than the 18 million shares originally projected and above the $12.00 to $14.00 range after the offering saw strong investor demand.

In addition to the spin-off via an IPO, Citigroup will sell 17.21+ million shares of Primerica to private equity firm Warburg Pincus LLC along with warrants for up to another 4.3 million shares at an exercise price per share equal to 120% of the per share public offering price.

Primerica’s 2009 profit was up almost 200% to about $495 million after seeing fewer write-offs, writedowns, and lower charges against its investments.

After the IPO, depending upon overallotments and dilution, Vikram Pandit and friends at Cit will have a stake of 32% to 46% stake.  The total shares outstanding will be 75 million shares.

For those who like to see firms coming public receiving all the proceeds, this may be a different IPO than that.  Primerica receives no new working capital nor any operating capital.

The underwriting group is huge here.  Citi is the book-runner; co-lead managers are UBS, Deutsche Bank, and Morgan Stanley.  Co-managers are KBW, Macquarie Capital, Raymond James, Sanler O’Neill, SunTrust Robinson Humphrey, ING, and Willis Capital Markets.

JON C. OGG