ING to Sell Shares in NN Insurance Unit as Soon as July

By Fred Pals and | June 5, 2014

ING Groep NV, the biggest Dutch financial services company, confirmed its plans, first made public last week, to sell shares of its European insurance unit in an initial public offering, which it has now announced could take place as early as July.

“If markets hold up as they currently look, there are not that many issues in the way of coming somewhere after the next two, three weeks,” ING Chief Executive Officer Ralph Hamers told reporters on a conference call today. “The moment the prospectus will come out, we will also give more information on offer size and price range.”

His comments represent the first firm indication of the timing of ING’s bid to cut its stake by more than 50 percent before the end of 2015. The company, based in Amsterdam, may sell the remaining shares before December 2016, according to an ING statement today.

Shares of ING Groep rose 0.7 percent to €10.49 [$14.28] by 10:18 a.m. in Amsterdam trading.

The deal, on the heels of Lloyds Banking Group Plc’s announcement last month that it will sell 25 percent of its TSB consumer bank, comes amid declining investor demand and growing IPO supply. Companies including Italian state-run shipbuilder Fincantieri SpA, U.K. retailer B&M European Value Retail SA and Eastern Europe’s largest budget carrier Wizz Air Ltd. announced plans last month to sell their shares.

The Dutch bank is seeking to value its NN unit at as much as €8 billion euros ($10.9 billion) in a transaction that may raise as much as €2 billion [$2.723 billion], three people with knowledge of the matter said May 29.

ING plans to list the unit on the Euronext Amsterdam exchange and the prospectus will be published after it has been approved by the financial markets regulator AFM. The approval process is ongoing, ING said.

“We welcome the IPO of NN Group which will be the final major transaction in ING Group’s five-year restructuring program,” Matthias de Wit, a Brussels-based analyst at KBC Securities, said in a note today. “The IPO of NN Group will provide investors with an interesting opportunity to invest in one of the industry’s strongest free cash flow and capital generators.” De Wit has a “buy” rating on the stock.

ING was ordered to dispose of insurance businesses from the U.S. to Malaysia to comply with a European Union restructuring plan, a condition for receiving a government bailout in 2008. The company has until the end of 2016 to complete that process.

The NN Group intends to pay out a second-half 2014 dividend of €175 million [$238 million] in 2015 with a pay-out policy of as much as 50 percent of net operating result from 2015, ING said.

“Our business strategy is focused on increasing cash and capital generation through efficiency, while delivering excellent service and products to our customers, Lard Friese, vice-chairman of NN Group, said in the statement.

NN Group has operations in the Netherlands, Poland, Turkey, Czech Republic, Slovakia, Romania, Hungary, Bulgaria, Belgium, Spain, Greece and Luxembourg, and Japan. It also includes ING’s asset management arm.

The NN Group sale comes after ING cut back its ownership in its U.S. unit, now named Voya Financial Inc., to about 43 percent. It also still owns a 10 percent stake in Sul America in Brazil.

–With assistance from Martijn van der Starre in Amsterdam.

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