AIA Said to Seek Advice on Possible Bid for ING Asian Unit
AIA Group Ltd. (1299) asked four investment banks to advise it on a potential offer for ING Groep NV (INGA)’s Asian business, a purchase that may be valued at more than $6 billion, said people with knowledge of the matter.
Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG and Morgan Stanley (MS) have been invited to evaluate the impact of a potential acquisition on AIA’s balance sheet and submit ideas on how the insurer could finance the deal, two people said, asking not to be identified because the information is private. AIA hasn’t given any banks a mandate to negotiate or structure a purchase, they said.
ING is under European Union orders to divest its entire insurance operations before the end of 2013 as a condition for approval of state aid. The firm last week scrapped plans to create an Asian-European insurer in an initial public offering and said it may sell the Asian business separately, given its greater allure for buyers after European markets worsened.
“The Asian business and the opportunities in Asian markets are much more attractive than in Europe at this point in time,” Chief Executive Officer Jan Hommen told reporters last week. “We have strong indications of strong interest, otherwise we wouldn’t have taken this step.” The firm isn’t “in detailed talks” about a possible sale of the units to another company, he added.
Shares Rise
ING shares surged as much as 6 percent in Amsterdam trading today and were up 4.1 percent to 6.51 euros as of 12:55 p.m., giving it a market value of 25.1 billion euros ($32.1 billion). That made it the biggest gainer in the 32-company Stoxx Insurance 600 Index, which rose 1 percent.
Spokesmen for Hong Kong-based AIA and ING, based in Amsterdam, declined to comment. Reuters reported earlier today that AIA is studying a bid for ING’s Asian business, citing unidentified people.
ING’s Asian insurance operations may fetch about 5.2 billion euros in a trade sale, according to Rabobank International analyst Cor Kluis. That will result in cash proceeds of about 3.9 billion euros for ING after payment of debt, the Utrecht-based analyst said in a note dated Jan. 12.
The sale process is at an early stage and ING may reach out to global insurers, including Prudential Financial Inc. (PRU), MetLife Inc. (MET), Ping An Insurance Group Co. and Samsung Life Insurance Co., one person with knowledge of the matter said. None of the companies have been approached yet, the person said.
New Business Expands
AIA, Asia’s third-largest insurer by market value, has generated new business at half the rate of China Life Insurance Co. despite having one of the largest pools of existing policies among regional insurers, Credit Suisse analyst Arjan van Veen wrote in a report last year.
AIA said in October the value of new business expanded 53 percent in the third quarter, led by higher sales in Malaysia and China. The insurer, which is 33 percent owned by American International Group Inc. (AIG), was the target of a failed takeover effort by Prudential Plc last year.
“ING’s Asian insurance portfolio is very well diversified and we believe that international as well as Asian players will bid for the unit,” Lemer Salah, an Amsterdam-based analyst at SNS Securities, said in a note today. The firm “has a strong franchise in Japan and Korea and some very interesting operations in growing markets,” including Malaysia, China and India, he said.
ING said last week its “base case” for an IPO of the U.S. insurance operations remained unchanged. The firm last month completed the sale of most of its Latin American unit to Colombia’s Grupo de Inversiones Suramericana for about 2.7 billion euros. That was about 1.8 times book value, based on International Financial Reporting Standards, ING said in July.
To contact the reporter on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net
To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net
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