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Essay / Research Paper Abstract
A 3 page paper discussing Citigroup’s IPO of 21 percent of the stock of Traveler’s Property Casualty less than a year after 9/11, followed by a secondary issue of stock in December 2003. The net cost of IPO was low and Citigroup was able to make a secondary offering after fine-tuning operations and governance at both Traveler’s and Citigroup. The Traveler’s stock gives investors a Citigroup company to invest in at a per-stock price less than half that of Citigroup. Bibliography lists 3 sources.
Page Count:
3 pages (~225 words per page)
File: CC6_KSfinCitiIPO.rtf
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Unformatted sample text from the term paper:
Citigroup acquired Travelers Property Casualty Corporation. Citigroup issued an IPO of 21 percent of the merged company in March 2002. In December 2003, it issued another 5,477,416,254 of
the 15 billion shares authorized in the company. The purpose here is to assess Citigroups long-term financing policy, using a recent example. The IPO
Citigroups purpose in the IPO was to raise $3.9 billion and to lessen its exposure to the insurance companys volatility. Before the IPO, Citigroup Chairman Sandy Weill
had been searching for a buyer for all or part of the insurance company (Patsuris, 2002). The entire industry suffered in the wake of the September 11, 2001 terrorist
attacks, which led to huge losses for those companies that had insured various aspects of the buildings or businesses contained within the Twin Towers. Though the entire insurance industry
had lost value in the market immediately following the attacks, those "steep losses permitted insurers to double and even triple policy rates in order to shield themselves from the next
big catastrophe. But until that next disaster arrives these rate increases will help significantly boost insurance company earnings" (Patsuris, 2002). Selling at the
time that it did ensured that Citigroup would not be sharing in all the benefits of a well-timed IPO in a more positive economic environment, but "analysts say that the
Travelers offering garnered more at this time than if the financial conglomerate had waited for the IPO market to peak again" (Patsuris, 2002). At the time, Travelers also was
a huge drain on its parent Citigroup. That fact was dulled some by Citigroups use of its former Salomon Smith Barney as the underwriter for this IPO (Patsuris, 2002),
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