Royal Bank of Scotland set to float Direct Line Group insurance arm
Taxpayer-backed Royal Bank of Scotland is set to launch the flotation of its Direct Line Group insurance arm within weeks after ending sale talks with private equity buyers, it was reported today.
The bank has been in talks with firms including Blackstone, Bain Capital and KKR about a private sale of Direct Line, which also includes Churchill and Green Flag, but has told them it will forge ahead with a stock market listing, according to the Sunday Telegraph.
RBS, which is 82% owned by the Government following its £45 billion bailout, believes a public listing is the best option despite continuing turbulence in equity markets, a source told the newspaper, with a prospectus slated for publication late next month.
It has said that a flotation was its preferred option for the business but many thought the tough economic climate would scupper its plans, as there have been few listings in recent months.
Private equity firms have been waiting in the wings to pounce on the business, attracted by its strong cash flows and market leading position.
Bidders were expected to pay between £3 billion and £4 billion for Direct Line - nearly all of it in cash because insurance regulators do not allow buyouts funded with large sums of debt.
RBS is required to sell the business, which also includes the Privilege brand and broker business NIG, by the end of 2014 in return for its taxpayer bailout. It has already agreed the sale of more than 300 UK branches and its 51% stake in RBS Sempra Commodities.
The bank said earlier this year it would list the insurance arm in three separate tranches - one this year, one in 2013 and the remainder in 2014 - to maximise returns for shareholders. The business could be worth up to £5 billion, according to recent reports.
Direct Line recently revealed a rise in quarterly profits despite worse-than-forecast weather claims worth £40 million.
The division, which has its headquarters in Bromley, south east London, and has operations in the UK, Germany and Italy, said the wettest April-to-June period since records began in 1910 was behind the surge in home claims in the three months to June 30.
But despite the unprecedented level of claims, the group revealed a 6% rise in operating profits to £219 million and increased the number of its in-force policies by 2% to 20.1 million.
Revealed: Stunning new images show gold-plated, ultra-luxurious Riyadh metro station that Saudi king has ordered to be built
World news in pictures
Far-right French historian, 78-year-old Dominique Venner, commits suicide in Notre Dame in protest against gay marriage
Oklahoma tornado latest: Rescue effort nears an end after President Obama pledges support for 'as long as it takes' to rebuild the suburb of Moore
Video emerges of Pope Francis reportedly performing an exorcism
- 1 Gay couple beaten in park urge MPs to moderate language on gay marriage
- 2 Swedes set up 'ultimate Viking movie'
- 3 After woman sells virginity for $780,000, here are the results of our prostitution survey
- 4 China agrees to impose carbon targets by 2016
- 5 Far-right French historian, 78-year-old Dominique Venner, commits suicide in Notre Dame in protest against gay marriage
BMF is the UK’s biggest and best loved outdoor fitness classes
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Win anything from gadgets to five-star holidays on our competitions and offers page.
iJobs Money & Business
£850 - £1000 per day: Orgtel: Programme Change Manager - Banking - London - £8...
£180 - £230 per day: Orgtel: Operations Analyst - Leading Bank in the City of ...
£500 per day: Orgtel: A top tier banking client urgently requires Finance Busi...
£425 - £550 per day: Orgtel: Senior Finance Project Manager - £550 - Bristol -...