Truist Financial in Charlotte, N.C., has agreed to sell a 20% stake in its insurance unit for nearly $2 billion in cash.
The $555 billion-asset company said in a press release that it plans to sell the stake to funds managed by Stone Point Capital. Mubadala Investment and other entities are also participating in the transaction.
The transaction values Truist Insurance Holdings at $14.8 billion, including a common equity value of $9.8 billion and $5 billion of inter-company preferred equity issued by the unit to the holding company.
The deal, which excludes Truist’s premium finance business, is expected to close in the second quarter.
Stone Point has the right to request that Truist explore selling the unit or take it public after 6.5 years. Under that scenario, Truist can buy the stake back at fair market value.
“We are excited for this collaboration with Stone Point, as the investment demonstrates the significant value of Truist Insurance Holdings and strategically positions it, and Truist, for long-term success,” Bill Rogers, Truist’s chairman and CEO, said in the release.
Truist said the sale should be 6% accretive to its tangible book value. It should be neutral to earnings per share, with the potential for growth as the generated capital is deployed over time.
A five-member board will be formed to oversee Truist Insurancee, comprised of four Truist-appointed members and one person selected by Stone Point.
Morgan Stanley, Truist Securities and Davis Polk & Wardwell advised Truist. Simpson Thacher & Bartlett advised Stone Point.