RBS offloading £630m worth of stake in Direct Line

State-backed bank RBS is offloading a 20 per cent stake in Direct Line, expected to net around £630m (release).

City AM understands the bank could get 207p to 210p for the stock, a discount of four to five per cent on the trading price. That's an 18 to 20 per cent premium on the insurer's 175p floatation price.

After an initial public offering last Autumn, RBS previously sold down its stake by £507m in March. After the sale RBS will have a 30.3 per cent stake left in the home insurer.

The Offering is expected to comprise 272.7 million Direct Line Group ordinary shares excluding an over allotment option (the "Base Offering"), equivalent to 18.2% of Direct Line Group's ordinary share capital. A further 27.3 million shares will be made available by RBS under an over allotment option (the "Over-allotment Option"). The offer price will be determined by means of an accelerated bookbuild offering process which is to start immediately.

Shares will be sold to institutional investors by bookrunners Goldman Sachs, Morgan Stanley, Royal Bank of Canada and UBS.