ING Said Near Sale of Asian Units to Li for $2.2 Billion
ING Groep NV (INGA), under European Union orders to divest assets, is near an agreement to sell its Hong Kong and Thailand insurance businesses for about $2.2 billion to Richard Li, son of Asia’s richest man, said three people with knowledge of the matter.
The Dutch company is in final negotiations with Li, 45, and an announcement may come as early as today, said the people, asking not to be identified because the discussions are private. The proposed sale may value ING’s Hong Kong business at about $2.1 billion and the Thai unit at less than $200 million, one of the people said.
Li’s father, Li Ka-shing, has pledged financial support for his younger son’s ambitions to build his own businesses. The purchase by Li, who sold his stake in a Hong Kong insurer in 2007, would be the biggest insurance deal in Asia since Chow Tai Fook Nominee Ltd., controlled by billionaire Cheng Yu Tung, bought a $2.5 billion stake in Ping An Insurance Group Co. in March last year.
“With the money from his dad, it’s sensible for him to make more of these acquisitions going forward,” said Benjamin Tam, who helps manage about $1.5 billion at IG Investment Ltd. in Hong Kong. “He has personal passion for the financial industry and had exposure in the insurance sector.”
A deal with ING would follow Richard Li’s purchase of PineBridge Investments LLC, a $68 billion investment manager, from American International Group Inc. in 2010. Li’s Pacific Century Group completed the $500 million purchase as AIG sold assets to repay a $182.3 billion U.S. government bailout.
Li sold his stake in Hong Kong insurer Pacific Century Insurance Holdings Ltd. to Fortis, the Belgian-Dutch financial- services company now called Ageas, in 2007.
“It was a successful transaction for him,” Tam said. “History tells you that he is good at financial engineering.”
Victorina de Boer, a spokeswoman for Amsterdam-based ING, declined to comment, as did a spokeswoman for Li, who requested anonymity.
Richard Li, the chairman of Hong Kong fixed-line operator PCCW Ltd. (8), also controls HKT Trust and HKT Ltd., and Pacific Century Premium Developments Ltd.
His older brother Victor is the heir to the property-to- ports empire their father created. Cheung Kong Holdings Ltd. (1), Li Ka-shing’s flagship company, has a market value of $34 billion.
An agreement would bring ING a step closer to fulfilling conditions stemming from its government bailouts in 2008 and 2009. Earlier this month, ING agreed to sell its Malaysian insurance business to AIA Group Ltd. (1299) for $1.7 billion.
“A sale at this price would be another positive surprise from ING,” said Cor Kluis, an Utrecht, Netherlands-based analyst at Rabobank International. “So far, they’ve gotten more for their divestments than estimated. Market sentiment is currently helpful.”
Kluis had estimated ING would get about 1.4 billion euros ($1.8 billion) for its Hong Kong and Thai insurance units, or 1.55 times book value. A price of 1.7 billion euros would represent 1.9 times book value, he said.
ING rose 1.3 percent to 7.13 euros in Amsterdam at the close of trading on Oct. 18, the highest level since March. That made it the best-performing stock in the 33-company Stoxx Insurance 600 Index (SXIP), which advanced 0.3 percent.
ING is required to sell its insurance and investment- management businesses before the end of 2013 after getting 10 billion euros of state aid during the financial crisis. While executing the imposed divestment program, ING is also selling banking assets to help speed up repayment of a remaining 3 billion euros in aid and 1.5 billion euros in additional payments.
In the last two months, ING announced an agreement to sell its Canadian online bank for $3.16 billion, its U.K. Internet business and a 33 percent stake in China Merchants Fund, an investment management joint venture. The company also raised about $3 billion last month by selling 54 million shares of Virginia-based Capital One Financial Corp.
Next to Malaysia, Thailand and Hong Kong, ING Insurance is active in markets ranging from South Korea, India, China and Japan, which is grappling with deflation and an aging population. The company’s Asian insurance and asset-management businesses had a combined book value of 6.6 billion euros at the end of June, the company said on Sept. 27.
ING reported in August a second-quarter profit of 112 million euros from its Asian insurance unit.