ING Groep Raises $1.18 Billion in U.S. Unit Share SaleZachary Tracer and Maud van Gaal
ING Groep NV, the biggest Dutch financial-services company, raised $1.18 billion with a sale of shares in its U.S. insurance unit as the parent company ended its majority stake.
The Dutch company sold 26.5 million shares in a public offering at $35.23 apiece, yesterday’s closing price in New York, ING U.S. said in a statement. The New York-based unit, which is changing its name to Voya Financial Inc. this year, agreed to buy another 7.26 million shares held by its parent for about $34.45 a share.
The agreement to buy back shares, announced this week, is “a favorable development,” Jay Gelb, an analyst at Barclays Plc, said in a March 18 report. “Voya’s capital position is strong and it appears on track” to reach its goal for ongoing return on equity of 12 percent to 13 percent by 2016.
ING Groep said in a statement it will use proceeds to pay debt. It is exiting the U.S. life business to comply with terms of a 2008 bailout. The Dutch company divested shares in an initial public offering in May for $19.50 apiece and had another sale in October.
ING U.S. has surged about 81 percent since the IPO. It declined 3 percent to $35.23 in New York before yesterday’s announcement. ING Groep advanced 0.6 percent at 10:10 a.m. in Amsterdam to 10.18 euros.
The parent company’s sales of 33.8 million shares will cut its ownership stake in the U.S. business to 45 percent from 57 percent. Underwriters have the option to purchase an additional
3.98 million shares, ING U.S. said. That would trim ING Groep’s holding to 43 percent.
“Today’s sale of ING U.S. common stock by ING Groep marks another important milestone for ING U.S. as ING Groep will cease to be our majority shareholder,” Rodney O. Martin Jr., chairman and chief executive officer of the U.S. unit, said in the statement.
Morgan Stanley, Goldman Sachs Group Inc., Citigroup Inc. and Bank of America Corp. handled the latest offering, ING U.S. said.
ING Groep will record a loss of about 2 billion euros ($2.8 billion) in its first-quarter results, reflecting the difference between the sale price and book value of ING U.S. shares, the Amsterdam-based company said in yesterday’s statement.
The Dutch firm has been selling assets since 2009 as a condition for European Union approval of a government bailout. As a final step in its restructuring, the firm now has to sell its remaining European and Japanese insurance operations by the end of 2018 at latest. CEO Ralph Hamers has said he’s preparing the businesses for an IPO in the second half of this year. What will remain is a bank that predominately relies on Europe for its earnings.
“With the expected IPO of the Euro/Japan insurance operations this year, the restructuring program should come largely to an end,” Bank of America analysts Blair Stewart and Michael van Wegen wrote in a note to investors today. “The increased transparency should highlight the attractive valuation of ING Bank.”