The Royal Bank of Scotland (RBS) has reduced the price of shares in Citizens Financial Group’s IPO to $21.50 from a $23 to $25 range announced earlier in September.
This means it expects to raise $3.010 billion instead of $3.5 billion from the sale of 140 million common shares, which represent a 24% stake in its American arm. Citizens Financial Group is valued at $12 billion.
There is an option to increase the total to 161 million shares or 28.75% of Citizens common stock. If the extra shares are sold, RBS expects gross proceeds to total $3.461 billion.
There was concern among several investors that potential buyers might not be willing to pay the original price range.
The bank says the proceeds will be used for general business purposes.
Commenting on the announcement, RBS CEO, Ross McEwan said:
“The sale of Citizens is an integral part of the RBS capital plan. This IPO represents a key step on the path to full divestment. Selling Citizens will significantly improve our capital position and help us to create a strong and secure bank that can continue to fully support the needs of its customers.”
RBS says the trading of Citizens common stock will commence on the New York Stock Exchange on September 24th, 2014 (today), under the ticker symbol “CFG”.
RBS, which is 80% owned by the British taxpayer, after it was bailed out during the financial crisis, says the remaining 75% stake in Citizens should be sold off by the end of 2016.