ING’s ING U.S. IPO was priced between $21 and $24 per share. Using the midpoint of this price range, the U.S. company is valued at $5.8 billion, which represents approximately six times 2012 operating earnings. ING Group is planning to float 25% of the company in this IPO, and the divestment is scheduled to be complete by the end of 2016, as part of an agreement with the Dutch government. The total offering would be $1.4 billion to $1.5 billion, based on this price range. Gross proceeds to ING U.S. and to ING Group will be $600 million and $800 million-$900 million, respectively.
The deal seems fairly priced, in our view. The pricing is comparable to the $1.8 billion price tag, or six times operating earnings, on Aviva’s U.S. business that was sold to Athene Holding last year.
The deal comes at a time when European-based insurers, including Aviva and Generali, are starting to pull back from the U.S. market due to concerns about the Solvency II capital requirements. Most recently, AXA also announced the sale of MONY Life to Protective Life. The uncertainties surrounding Solvency II could be an overhang to this IPO, in our view, given the Dutch parent is still a majority owner. ING U.S. offers both investment management and insurance services. The company was one of the largest sellers of VA products, but the business was placed in run-off in 2009 amid deep losses as equity market faltered.
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