Private Equity Deals & Transactions

Fortress backed Springleaf to acquire OneMain

The acquisition will create a subprime loan giant in the US

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Fortress backed Springleaf Financial will acquire OneMain Financial from Citigroup, creating one of the largest subprime lenders in the US. The all-cash deal is valued at approximately $4.25 billion.

The transaction is expected to close in the third quarter pending regulatory approval.

At closing, the combined company is expected to have 1,967 branches across 43 states.

OneMain has been in business since 1912 providing small loans. Springleaf provides similar lending services through branches like OneMain does, and online. Springleaf cited complimentary branches in the OneMain portfolio as one of the reasons for the deal. Redundant branches are likely to be consolidated as the integration process moves forward through mid-2016. The combined company will be led by Springleaf CEO Jay Levine, and Mary McDowell will continue as CEO of OneMain.

Citi has been hoping to spin off OneMain for years as it works to clean up its balance sheet. The bank recently tightened underwriting standards at OneMain in an effort to make it more saleable.

“Today’s announcement is a significant milestone in the simplification of our company and we continue to focus on delivering the potential of our franchise for our clients and shareholders,” Citi CEO Michael Corbat said in a statement.

OneMain has been part of Citi Holdings since 2009.

Springleaf Financial is significantly backed by Fortress Investment Group. The investment dates to August 2010, when Fortress agreed to purchase an 80 percent stake in American General Finance for approximately $125 million. Springleaf went public three years later, and Fortress now owns 73 million shares.

“As a significant shareholder of Springleaf, we believe this is a compelling transaction, both strategically and financially,” Fortress co-chairman Wes Edens said in a statement. “This combination will create a premier consumer finance company, serving approximately 2.5 million customers, with $15 billion in assets, 2,000 branches and a leading digital presence in the market.”