ING U.S. IPO Raises $1.27 Billion Priced Below Range

ING U.S. Inc., the New York-based unit of the largest Dutch financial-services company, raised $1.27 billion in its initial public offering, pricing an increased number of shares below the marketed range.

ING U.S. sold 65.2 million shares for $19.50 each, according to a statement yesterday, after offering 64.2 million shares for $21 to $24 apiece. ING U.S. will be renamed Voya Financial after the IPO and the switch will take about two years, the company has said. The stock will start trading today, listed on the New York Stock Exchange under the symbol VOYA.

ING Groep NV took its U.S. unit public after it agreed to sell global-insurance and investment-management operations to win European Union approval of its 2008 bailout from the Netherlands. Jan Hommen, chief executive officer of the Amsterdam-based parent, has overseen more than 25 asset disposals for at least 20 billion euros ($26 billion) in proceeds. Rodney Martin, the CEO of ING U.S., helped American International Group Inc. repay its rescue by divesting assets.

“While the price is slightly disappointing, the miss in proceeds for ING isn’t very significant in the whole process,” said Tom Muller, an Amsterdam-based analyst at Theodoor Gilissen Bankiers NV who doesn’t recommend clients buy the stock. “The company is good and healthy yet it has a long way to go in its recovery.”

Debt Payment

ING Groep shares fell 0.6 percent to 6.19 euros as of 9:18 a.m. in Amsterdam trading today, giving the company a market value of 23.7 billion euros. That compares with a 0.1 percent gain in the 33-company Stoxx Insurance 600 Index.

ING U.S., which has about 13 million customers and sells life insurance, annuities and retirement products, said in filings before the IPO that it would receive $600 million of gross proceeds from the offering, which it would combine with about $1.4 billion of payments from subsidiaries and $1.1 billion from a planned debt sale to help repay borrowings.

ING U.S.’s IPO is the second largest in the U.S. this year, behind the $2.6 billion initial offering by Pfizer Inc.’s animal-health unit Zoetis Inc. in January, data compiled by Bloomberg show.

Morgan Stanley, Goldman Sachs Group Inc. and Citigroup Inc. led the sale.

Scaling Back

ING U.S. scaled back from selling equity-linked retirement products known as variable annuities. It was the fourth-largest seller of the contracts in 2007 and had dropped out of the top 20 by 2011, according to data from industry group Limra.

The insurer is focusing on managing assets for retail clients and institutional investors and selling protection products such as life insurance. The retirement segment provided 49 percent of operating earnings before taxes in 2012, and individual life accounted for 21 percent, the IPO filing shows.

The net loss in the three months ended March 31 was about $190 million to $230 million, ING U.S. said in a filing last week. The loss was driven by hedges that guard against falling stocks on variable annuities. Operating earnings before taxes in the ongoing business were about $270 million to $290 million, ING U.S. said.

ING Groep, which has pledged to repay all 10 billion euros in state support by 2015, so far has returned 7.8 billion euros, as well as 2.4 billion euros in interest and premiums. Proceeds of the share sale, seen at about $700 million, will be used to pay off debt at ING group level, the Dutch company said.

After the IPO, it will own 75 percent of its U.S. unit. ING has to dispose of the entire division by the end of 2016.