(Updates with Alt-A loans starting in eighth paragraph.)
June 8 (Bloomberg) -- KKR & Co., the leveraged-buyout firm run by Henry Kravis and George Roberts, is pursuing a minority investment in ING Groep NV’s U.S. online bank, a person with knowledge of the matter said.
The potential deal may involve ING keeping a majority stake in the unit, known as ING Direct USA, or selling it to another bidder, the person said, speaking on condition of anonymity because the talks are private. General Electric Co. and Capital One Financial Corp. submitted bids last week for the bank, people with knowledge of the sale talks said this week.
A private-equity bid for some or all of ING Direct USA is unlikely to prevail against one from a company that’s already in the lending business, said another person with knowledge of the sale process. ING is pushing to reach an agreement with a buyer as soon as this month, and may get $9 billion in a sale, the people familiar with the talks said.
ING is under European Union orders to sell the U.S. unit by 2013 as a condition of its bailout, which included a 10 billion euro ($14.6 billion) government lifeline received in 2008. ING is also divesting its insurance units to comply with the terms.
Kristi Huller, a spokeswoman for New York-based KKR, and Carolien van der Giessen, a spokeswoman for Amsterdam-based ING, declined to comment.
KKR has taken minority stakes in financial firms before. In 1991, the company put up $283 million to help Fleet/Norstar Financial Group buy the collapsed Bank of New England Corp. The buyout firm ended up with a minority stake in Fleet.
In 2008, KKR bought a $1.25 billion stake in Legg Mason Inc., the Baltimore-based money manager, in the form of convertible notes.
A sale of ING Direct USA is complicated by the fact that the U.S. lender holds part of a pool of Alt-A mortgage assets that are the subject of Dutch government aid. The government agreed to assume 80 percent of the risk of the portfolio.
The government isn’t interested in guaranteeing assets owned by a third party, Dutch Finance Minister Jan Kees de Jager told members of parliament in The Hague today. ING suggested moving the assets out of ING Direct USA to another part of ING, he said.
Alt-A loans, considered a step above subprime mortgages in terms of expected defaults, were often granted to borrowers who didn’t document their income or bought investment properties.
--With assistance from Maud van Gaal in Amsterdam. Editors: Jennifer Sondag, Steve Dickson
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