The IPO, which was filed last week, comes five years after Citigroup signaled that it wanted to exit the business. Like many subprime lenders, OneMain Financial experienced major losses during the financial crisis. However, since 2012, the company has been profitable: earning $407 million in net income in 2012, and $536 million in 2013. Citigroup earned $7.54 billion and $13.67 billion in those years, respectively, according to the Wall Street Journal.
The filing disclosed OneMain's concerns about the increased regulatory scrutiny affecting its industry, such as the Consumer Financial Protection Bureau cracking down on debt-collection practices. OneMain sells its loans made to consumers with troubled credit to agencies that hope to collect payment on them.
Known for its subprime loans, OneMain said many of its customers have credit scores that are below what is typically considered prime and are homeowners with long-term jobs. Their average income is $45,000 a year.
OneMain said its relationship with peer-to-peer lender Lending Club has helped it gain clients. The peer-to-peer lender refers potential borrowers who do not meet its credit criteria to OneMain, according to the Wall Street Journal
Citigroup is also hoping to outright sale of the lender, which has branches in 43 states, according to The New York Times
. The bank has said the unit no longer fits with its strategy of targeting more affluent customers.
Citigroup’s OneMain Financial, a major player in subprime lending, is preparing for a $50 million initial public offering, and how it performs could provide insight into the current state of subprime lending.