ROYAL Bank of Scotland is said to have found buyers for the full 33 per cent stake of Direct Line it is selling to stock market investors, just three days into a nine-day marketing drive.
The bank is selling Direct Line, Britain’s biggest motor insurer, to win European Union regulatory approval for a government bailout it received during the 2008 financial crisis that left it 82 per cent state-owned.
A source close to the flotation said: “The book is now fully covered within the range, and to get that done three days in is pretty encouraging.”
Direct Line, which also includes the Churchill and Green Flag brands, would be worth £2.66 billion at the mid-point of the 160p to 195p a share price range, at the lower end of market forecasts.
The initial public offering (IPO), London’s biggest in a year, has faced further pressure because of investor worries about weak growth prospects in the British motor insurance industry, which is also facing a Competition Commission probe.
Another source said banks handling the sale had so far focused on attracting British investors, and would now turn to marketing the shares in North America and continental Europe.
RBS said last month it would sell a maximum of 33 per cent of Direct Line in the first of several share offerings aimed at disposing of the business entirely by the end of 2014.
If priced at 195p, the insurer could raise as much as £975 million, making the sale London’s biggest IPO in over a year. Order books, which opened on 28 September, are due to close on 10 October.
RBS has been under political pressure to secure a good price for Direct Line to help reduce the British taxpayers’ current loss of £22bn on the £45bn the government pumped into the bank to secure its future.
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