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BlackRock, Santander Said to Pursue Citigroup Consumer Unit

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Citigroup’s Former President Robert Willumstad
Robert Willumstad, managing partner of Brysam Global Partners. Photographer: Andrew Harrer/Bloomberg

March 3 (Bloomberg) -- BlackRock Inc., Banco Santander SA and more than 10 private-equity firms are forming groups to bid for Citigroup Inc.’s U.S. consumer-lending unit, people with knowledge of the matter said.

BlackRock, the world’s biggest money manager, and private-equity firms KKR & Co. and Warburg Pincus LLC are considering a joint bid for the unit and are in talks to include Santander, Spain’s biggest bank, said the people, who spoke on condition of anonymity because the discussions are private. Their team is one of at least four competing for the business, which has about $13 billion of assets, the people said.

Citigroup Chief Executive Officer Vikram Pandit, 54, put the Baltimore-based lender on the auction block this year, part of a program to shed more than two dozen units and simplify the organization after the bank’s $45 billion U.S. bailout. In December, New York-based Citigroup announced plans to change the unit’s name to OneMain Financial from CitiFinancial.

Robert Willumstad, 65, Citigroup’s former president, is leading another bidding team through his Brysam Global Partners, the people said. That group includes Blackstone Group LP, Carlyle Group, Thomas H. Lee Partners LP and WL Ross & Co.

Private-equity firms Apollo Management LP and J.C. Flowers & Co. also are working on a joint bid, the people said. Apollo is already in the mortgage business -- a key part of the OneMain portfolio -- through its 2008 investment in Vantium Capital, which buys residential mortgage assets.

Book Value

Another bidding group includes Clayton, Dubilier & Rice LLC and Toronto-based Onex Corp., the people said. The membership of each group may change as the bidding proceeds, the people said.

Spokesmen for Citigroup, BlackRock and Santander declined to comment. Spokesmen for the private-equity firms either declined to comment or didn’t respond to messages seeking comment.

“If we are involved in this, it would be on behalf of clients, not for our balance sheet,” BlackRock Chief Executive Officer Laurence Fink, 58, said today in an interview on “Inside Track” on Bloomberg Television.

Citigroup is seeking bids that value the $13 billion of assets at least at book value, the people said. Net of liabilities, the unit has about $2 billion of book value, they said. Most of the liabilities won’t be included in the sale, the people said. A bidding deadline is set for next week.

‘Life’s Emergencies’

The unit, which traces its roots to the founding in 1912 of Commercial Credit, lends “money for life’s emergencies,” including car repairs, medical bills and debt-consolidation, according to its website. Customers have difficulty getting credit elsewhere, Pandit said during a July conference call.

“It’s a business that we continue to like,” he said at the time. “It may not fit in our ongoing strategy but it’s certainly extremely valuable to somebody.”

Last year, bailed-out insurer American International Group Inc. sold a similar consumer-lending business with $19.6 billion of assets, American General Finance Inc., to Fortress Investment Group LLC. Also in 2010, Wells Fargo & Co. closed its consumer-lending operation.

To contact the reporters on this story: Zachary Mider in New York at zmider1@bloomberg.net; Cristina Alesci in New York at calesci2@bloomberg.net; Donal Griffin in New York at dgriffin10@bloomberg.net

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net

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