RRJ Capital Ltd., run by Charles Ong, and his former employer Temasek Holdings Pte, agreed to invest 1.28 billion euros ($1.8 billion) in ING Groep NV’s NN insurance business before the unit’s initial public offering.
ING will get 750 million euros in cash from RRJ, 425 million euros from Temasek, Singapore’s state-owned investment company, and 100 million euros from Temasek-owned Seatown Holdings International, Amsterdam-based ING said today. The Dutch lender will allocate 150 million euros of NN shares at the IPO and issue subordinated ING notes in exchange, it said.
“The pre-IPO money is coming from high-profile investors, which is clearly positive,” JanWillem Knoll, an Amsterdam-based analyst at ABN Amro Group NV, said by e-mail. The investment “lowers the execution risk of the deal,” he said.
ING was ordered by European Union regulators to dispose of its entire global insurance operations to get approval for its bailout in 2008. After selling insurance assets in Asia and the U.S., the remaining European and Japanese businesses are on course for an IPO in 2014, ING said today. The unit, named NN Group, can be valued at about 6.5 billion euros, according to the average estimate of five analysts surveyed by Bloomberg.
ING shares rose 1.4 percent to 10.24 euros in Amsterdam today, extending the company’s market value to 39 billion euros. The 38-company Stoxx Europe 600 Insurance Index fell 0.2 percent.
Founded in 2011, RRJ is run by former Goldman Sachs Group Inc. partner Richard Ong and his brother Charles, who was with Temasek for a decade. Charles was Temasek’s chief investment officer and chief executive officer of Seatown.
“We’re very pleased to have the opportunity to invest in NN Group,” Charles Ong said in an e-mailed statement. “This reflects our confidence in the long-term prospects of the company and the management’s ability to execute its plans.”
UBS AG is the sole adviser to RRJ on the deal, the company said. ING Groep was advised by JPMorgan Chase & Co., Morgan Stanley and ING Bank.
RRJ also owns a stake of more than 4 percent in Voya Financial Inc., the U.S. insurance unit in which ING started selling shares last year, according to data compiled by Bloomberg. That makes it the U.S. insurer’s second-biggest investor, after ING Groep, which still owns 43 percent.
Voya shares have surged almost 80 percent since the IPO in May, when ING sold the first shares for $19.50 a piece. The stock rose 1.5 percent to $34.83 in New York yesterday.
ING will issue 1.13 billion euros in mandatory exchangeable subordinated notes paying 4 percent interest to the three investors in May, it said today. The notes will be converted into shares in three tranches before the end of 2016, with a first 450 million euros upon closing of the planned IPO, ING said. If the NN Group IPO doesn’t take place in 2014, the deals will be unwound and the debt will be redeemed.
The investment adds to Temasek’s insurance “presence in central, eastern and the rest of Europe, as well as operations in Japan,” said Stephen Forshaw, a spokesman for the investment company.
NN Group has insurance operations in the Netherlands, Poland, Turkey, Czech Republic, Slovak Republic, Romania, Hungary, Bulgaria, Belgium, Spain, Greece and Luxembourg, and life insurance operations in Japan. It also includes ING’s asset-management arm.
ING, ordered to dispose of about 45 percent of its balance sheet after receiving a 10 billion-euro bailout in 2008, has until the end of 2016 to complete its restructuring. The company, led by Chief Executive Officer Ralph Hamers, will continue business as a European-focused bank.