The Royal Bank of Scotland Group (RBS) is intending to dispose of 15.3% shares in its motor insurance startup, to boost its capital base ahead of regulators’ deadline.
Representing nearly 229.4 million shares, the share sale will be executed through a placing of shares in Direct Line Group to institutional investors.
Following completion of the transaction, RBS shareholding in the motor insurance will remain under 49.99%, equivalent to 749.9 million issued ordinary shares.
Under an over-allotment option, the 82% UK government owned lender has also agreed to further make available 22.9 million shares.
The lender has inked an agreement with Goldman Sachs International, Morgan Stanley Securities and UBS to serve as joint bookrunners and placing agents in relation to the offering.
In October 2012, RBS disposed of 30% of the motor insurer for pound 787m, valuing the whole company at pound 2.63bn.
The bank has agreed with European Commission that it will offload the whole of Direct Line by 2014, to comply with the conditions set when the bank received a bailout package during the financial crisis of 2008.
