According to Reuters, OneMain Holdings, Inc. is in the process of selling itself and running an auction for takeover bids. It is reportedly having discussions with a number of interested parties, including private equity firms and rival lenders. The values of certain bids are still unknown, but OneMain does have a current market value of $3.9 billion which may provide insight on the matter.
This story was also reported by the Wall Street Journal on Sunday, citing anonymous sources. Representatives from OneMain have declined to comment so far. It is unclear whether the auction will produce a sale but if it does it will be one of the biggest financial industry transactions in recent years. It has been estimated that a potential deal could be worth $4 billion or more.
There has been very little deal-making since the financial crisis. Banks are now more heavily regulated and often restricted from acquiring large loan businesses. OneMain is one of the biggest players in the shadow banking system, a network of nonbank firms that are less heavily regulated, dealing with an industry where many larger banks have shied away in the wake of the 2008 financial crisis
OneMain Holdings is a consumer credit firm that offers personal and auto loans to lenders who typically have trouble obtaining loans elsewhere. According to Fair Isaac Corp. data, 75 percent of OneMain’s $14 billion portfolio is made up of loans to people with credit scores lower than 660.
OneMain currently has 1,700 branches across 44 different states and 2.2 million customers. Previously owned by Citigroup, OneMain was previously named CitiFinancial. It changed its name to OneMain in 2011. This isn’t the first time it’s been sold either.
In 2015, Citigroup sold OneMain to Springleaf, a lender that is backed by Fortress Investment Group Inc. Fortress owns 55 percent of OneMain’s shares and the rest are traded publicly. Fortress is currently in the process of being sold to SoftBank Group Corp.
OneMain’s value is up nearly 50 percent this year after reducing their debt and moving toward secured personal loans that are backed by collateral, which is less risky than unsecured loans. Roughly half of the $3 billion issued in loans from 2016 were backed by collateral. This recent change in direction has led it to becoming a leader in specialty-finance stocks and helped outperform rival lenders.
Author: Andrew Rombach
Join the LendEDU Newsletter
News, insights, & tips once a weekThanks for submittingPlease Enter a valid email
Personal Loans Information
Personal Loan Reviews