Bank bosses preferred route still a flotation but private equity interest is strong
A number of private equity firms are keen on attempting to persuade RBS Bank bosses to sell Direct Line Group, instead of opting for a flotation, Insurance Times understands.
In the latest twist, a number of potential new private equity bidders for the group have been tipped to buy the business, including BC Partners, Cinven, Kohlberg Kravis Roberts & Co, Apax Partners and Carlyle Group.
Insurance Times understands the tentative bidding price from private equity is between £2.5bn and £3.5bn, but the bank is holding out for a flotation, believing it can achieve a £4bn valuation.
However, that may change with the turbulence from the eurozone rocking equity markets.
One source said: “The markets are volatile, and getting an IPO in excess of £4bn away is not going to be easy. Private equity houses will know that.
“So, as it stands at the moment, there is not an opportunity for them, but that doesn’t mean that the window won’t open if the markets stay as volatile as they are.”
An RBS spokesman reiterated the bank’s plans to float.
A spokesman said: “RBS Group is responsible for the divestment of Direct Line Group. The base case plan is for RBS Group to dispose of Direct Line Group by way of a public flotation.
“This flotation is targeted to commence in the second half of 2012, subject to market conditions. The process of separation is proceeding on plan.”
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