ING Groep NV, the biggest Dutch financial-services company, is seeking as much as €1.54 billion ($2.1 billion) in the first and what may be only public offering of its European insurance unit.
The firm plans to offer 70 million shares of NN Group for 18.5 to €22.00 [$29.86] apiece, the seller said yesterday in a statement. ING’s ownership in NN will drop to 73.6 percent after the share sale and the exchange of €450 million [$611 million] in convertible notes under an agreement with three Asian investors ahead of the IPO.
ING has been selling assets since 2009, including a majority stake in U.S. insurer Voya Financial Inc., as a condition for European Union approval of a government bailout. ING will use the IPO proceeds to pay off debt, a prerequisite for unwinding the group into a bank and an insurer, and said it retains flexibility in how it will carry out the divestment of the remaining stake.
Rather than sell more shares to the public after the IPO, “ING could look to spin off the remaining shares in NN to the shareholders of ING Group,” Anton Kryachok and Nick Davey, London-based analysts UBS AG, said in a note today. The firm could also use some future divestment proceeds to repay the Dutch state, leaving its banking business with a bigger capital buffer, they said.
A price in the middle of the range would represent a 13 percent discount on the value of NN as seen by UBS, which recommends clients buy ING stock.
ING rose as much as 1.2 percent and was up 1 percent to €10.51 [$14.27] at 9:21 a.m. in Amsterdam. The stock has advanced 4.1 percent this year.
Shares in NN Group are expected to be listed on Euronext Amsterdam on July 2, according to the statement. The offer includes €150 million [$203.64 million] committed by three Asian firms, including RRJ Capital Ltd.
Those investors have also agreed to buy €1.13 billion [$1.534 billion] of subordinated ING notes that are convertible to NN stock in three tranches. The first €450 million [$611 million] part will be exchanged at settlement of the IPO, ING said.
NN Group intends to pay a second-half 2014 dividend of €175 million [$237.6 million] in 2015, with a payout policy of as much as 50 percent of net operating profit from 2015, ING said this month. The company, which will be led by Lard Friese, has operations in countries including the Netherlands, Poland, Turkey, Czech Republic, Slovakia, Romania, Hungary, Belgium, Spain and Japan. It also includes ING’s asset management arm.
ING, the recipient of a €10 billion [$13.576 billion] bailout from the Netherlands in 2008, agreed with EU regulators to complete its disposal program by the end of 2016 and to sell more than half of NN by the end of next year. ING also still owns about 43 percent of Voya and a stake of about 10 percent in Sul America SA in Brazil.
The company is open to selling the Sul America stake, worth about 566 million reais ($253 million) based on the Rio de Janeiro-based insurer’s market value, in a block trade, Chief Executive Officer Ralph Hamers said in an interview in Sao Paulo yesterday.