RBS Said to Plan Direct Line IPO as Soon as This Week

Royal Bank of Scotland Group Plc is poised to start the initial public offering of its insurance unit Direct Line Insurance Group Plc as early as this week, according to people with knowledge of the discussions.

RBS, Britain’s biggest government-owned lender, plans to sell about 25 percent in the insurer to raise as much as 1 billion pounds ($1.6 billion), said the people, who declined to be identified because the plans are private. No final decision has been made about the timing and valuation, the people said.

The IPO of Direct Line, the U.K.’s largest home and motor insurer, would be the country’s biggest since Glencore International Plc (GLEN) raised $10 billion in May 2011. Companies raised $1.4 billion in London this year, compared with $15.6 billion fetched during the same period a year ago, according to data compiled by Bloomberg.

While various private equity firms expressed interest in buying a stake in the insurer, none have entered into formal discussions because of disagreements over price, people said. An RBS spokeswoman in London declined to comment.

The planned offer comes after the European Union ordered RBS to sell the division in return for receiving state aid. Direct Line reported operating profit rose 7 percent in the first half compared to a year earlier.

To contact the reporters on this story: Zijing Wu in London at zwu17@bloomberg.net; Ambereen Choudhury in London at achoudhury@bloomberg.net; Gavin Finch in London at gfinch@bloomberg.net

To contact the editor responsible for this story: Jacqueline Simmons at jackiem@bloomberg.net

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