By Olivia Oran
May 1 Dutch financial services group ING Groep
NV's U.S. unit raised $1.3 billion in its initial
public offering on Wednesday, less than expected, though the
offering ranked as the second largest U.S. float of the year
behind Zoetis Inc.
ING U.S. sold more shares than expected but at a price that
was below the marketed range. It sold 65.2 million shares at
$19.50, according to an underwriter. It had intended to price
64.2 million shares at a range of $21 to $24.
The shares were offered by both ING U.S. and its parent. The
proceeds for ING U.S. from the offering are intended to be about
ING Groep is splitting its banking and insurance operations
as part of a restructuring agreement with the European
Commission, turning into a smaller Europe-focused bank.
The group received a 10 billion euro ($12.71 billion)
capital infusion from the Dutch government in 2008 and has been
selling assets to repay the bailout. It sold its U.S. online
banking business ING Direct USA for nearly $9 billion to Capital
One Financial Corp in 2011.
ING Groep's ownership in ING U.S. will fall to 75 percent
after the IPO. The parent will shed the rest of its stake by
ING U.S., which is led by former American International
Group Inc executive Rodney Martin, provides insurance,
retirement and investment services and competes with companies
like MetLife Inc and Prudential Financial Inc.
It has roughly 13 million customers and reported net income
of $473 million last year. According to the American Council of
Life Insurers, it ranks among the 10 largest life insurers in
the United States by assets and individual policies issued.
Like peers, ING has been forced to deal with a persistently
low interest rate environment, which means lower returns on
Actuaries have suggested that if rates remain this low for
just a few more years, some insurers will have to rethink their
businesses entirely, given the risk that they may not be able to
generate sufficient returns to cover their obligations.
When it first filed to go public in November, ING U.S. said
it intended to rebrand itself after listing and that it expected
"substantial costs" in connection with the rebranding. However,
the company does not expect to shift to the new brand name of
Voya Financial until 2014.
It also expects the rebranding to take about 24 months and
cost $40 million to $50 million, excluding incremental
U.S. IPO proceeds have risen 22 percent so far this year to
$36.9 billion as of May 1, according to Thomson Reuters data,
boosted by public floats from companies tied to the housing
market and those offering dividend yields to investors like
REITs and MLPs.
ING U.S. will list on the New York Stock Exchange under the
Morgan Stanley, Goldman Sachs Group Inc and
Citigroup led the IPO.