Bloomberg News

NN Group Jumps in Amsterdam as ING Sells Stake in Insurer

July 02, 2014

NN Group NV (NN) climbed as much as 8.8 percent on its first day of trading after ING Groep NV (INGA), the biggest Dutch financial-services company, raised 1.54 billion euros ($2.1 billion) selling shares in its insurance arm.

NN Group rose as high as 21.76 euros, compared with the IPO price of 20 euros, and traded at 21.55 euros by 2:43 p.m. in Amsterdam. ING sold 77 million NN shares, it said yesterday. Including a conversion of 450 million euros in mandatory exchangeable notes under an agreement with three Asian investors, gross proceeds for ING were about 2 billion euros.

The sale of 28.6 percent of NN Group, with operations in Europe and Japan, brings ING closer to the end of a program imposed by European Union regulators following a 2008 rescue from the Netherlands. It will use the proceeds to pay debt and further split insurance from its banking operations.

“The listing today is the final step in the restructuring of ING from a bank-insurance company into a more and more pure bank,” ING Chief Executive Officer Ralph Hamers said. “It’s a bit of a mixed emotion as we had to change course. We had to end one era to start a new one.”

JPMorgan Chase & Co., Morgan Stanley, Deutsche Bank AG and ING Bank managed the NN Group offering. It is Europe’s second-biggest IPO this year behind a sale by AA Ltd., according to data compiled by Bloomberg.

Market Value

ING shares rose 0.5 percent to 10.54 euros in Amsterdam, giving the company a market value of 40.5 billion euros. The Euro Stoxx Banks Index slipped 0.1 percent.

“Today’s announcement marks a very important event for ING and underscores again that the company will soon complete its restructuring story,” Lemer Salah, an Amsterdam-based analyst at SNS Securities, said in an e-mailed report today. “We remain bullish on the stock given its numerous positive triggers and strong market position in Europe.”

ING had said that it would offer 70 million NN shares for 18.50 euros to 22 euros apiece. It increased the offering to meet “significant investor demand,” according to a statement yesterday. The offer price values NN at 7 billion euros, less than half its book value.

NN was the biggest life insurer in the Netherlands, based on 2012 gross written premiums, and the largest provider of mandatory pensions in Poland and Romania, according to a prospectus published on June 17. The company traces its roots to 1845, when its earliest predecessor started selling fire insurance in the Netherlands.

Operating profit before taxes at NN’s continuing operations was 905 million euros last year and 295 million euros in the first quarter. NN plans to expand earnings on that basis by 5 percent to 7 percent on average in the medium term and pay a dividend of 40 percent to 50 percent of the result from 2015, according to the document. The firm plans a first 175 million-euro payout to shareholders over the second half of this year.

‘Unique Feature’

“We do have a unique feature which is a combination of cash generating and growth businesses, and asset management activities.” NN CEO Lard Friese told reporters today. “We believe that gradually the European macro-economic backdrop will improve.”

ING’s ownership may shrink to 68.1 percent if underwriters fully exercise an option to buy as many as 11.6 million additional NN shares, the company said yesterday.

The firm agreed to sell more than half of NN by the end of next year and complete the disposal of its entire global insurance operations by the end of 2016. To do that, it will also have to unwind a remaining stake of about 43 percent in Voya Financial Inc. (VOYA:US) in the U.S.

ING said last week it sold a remaining 10 percent stake in Brazil’s Sul America SA through a block trade for about 170 million euros.

Next Step

Hamers, who joined ING in 1991, said the company wants to retain full flexibility in disposing of the rest of NN. Depending on markets and other developments, he’ll decide whether to sell more shares or to spin off parts to existing ING shareholders, he told reporters.

The Dutch government came to the rescue of ING in 2008 with a 10 billion-euro capital injection after the company was hit with losses on assets backed by U.S. mortgages during the financial crisis.

To contact the reporter on this story: Maud van Gaal in Amsterdam at mvangaal@bloomberg.net

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net Mark Bentley


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Companies Mentioned

  • VOYA
    (Voya Financial Inc)
    • $41.86 USD
    • 0.73
    • 1.74%
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