Direct Line prepares to raise debt ahead of IPO

Direct Line Group is planning to raise debt ahead of its listing later this year, potentially returning cash to its taxpayer-back parent.

Direct Line Group has mandated RBS, Citigroup and HSBC arrange meetings with fixed-income investors to sell subordinated debt, bookrunners said, according to Reuters. Direct Line declined to comment.

A benchmark deal could see between £250m and £500m of debt sold.

While the group does not have any debt, it is expected to take some on as part of a reorganisation of its structure before its listing. It could return cash to RBS in the form of a dividend, or allow the parent group to reduce its own debt.

Analysts estimate its initial IPO at just over £3.2bn, reports Reuters.