Just under a year earlier than expected by some in the City, Royal Bank of Scotland (RBS) this week (26 February) announced the sell-off of the majority of its remaining stake in Direct Line, gifting Allen & Overy (A&O) with a further bite of the cherry in a deal anticipated to be worth over £1bn.
A&O led by corporate partner David Broadley was first instructed on RBS’ float of 34.72% of Direct Line in the autumn of 2012, after the 80% nationalised bank was forced to offload the major insurer under EU regulations on state aid.
The beleaguered high street bank sold off a further tranche to investors last March for £507m, with this latest sale of the majority of its outstanding shares coming in the same week as RBS announced a loss in excess of £8bn, as chief executive Ross McEwan also announced plans to reduce the bank’s costs by £5bn by 2017.
On the IPO Broadley led a multi-disciplinary A&O team alongside senior RBS advisers, general counsel corporate/M&A Rushad Abadan and legal counsel Scott Gibson. The team worked opposite Slaughter and May for Direct Line, led by M&A partners Jeff Twentyman, Andy Ryde and Robert Chaplin. Direct Line was also advised by its in-house team led by general counsel and company secretary Humphrey Tomlinson.
However, Slaughter and May said it will have no role on the forthcoming £1bn straight forward sell-off of RBS shares, which are largely expected to go to institutional investors.
The role is a significant repeat instruction for A&O, which is on RBS’ 21-strong panel, unveiled in July 2013 and including Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters as well as many of the larger City and transatlantic firms such as Eversheds, Hogan Lovells and Norton Rose Fulbright. RBS often turns to Linklaters for its major corporate mandates, including the sale of a 20% stake in WorldPay to private equity firms Advent International and Bain Capital late last year.
The sell-off of Direct Line comes as the insurance company reported a 70% increase in pre-tax profits on Wednesday.
Under European Union competition rules, imposed after the £45bn taxpayer bailout of RBS, it must sell its entire holding by the end of this year.