By Olivia Oran
NEW YORK May 2 Shares in ING U.S. Inc
rose nearly 6 percent in their New York Stock Exchange debut on
Thursday following its spin-off by Dutch financial services
company ING Group via a $1.3 billion initial
The IPO of the U.S. insurance and investment management
business marks an important step in ING Group's enforced
separation of its global banking and insurance businesses.
ING is dismantling its once-fashionable bancassurer model
after it had to be bailed out by the state in 2008, divesting
insurance and investment management and other assets through
disposals or stock market listings as it prepares to repay the
state and bolster its capital.
"It's an important milestone. We're about 70 percent done
now," said Jan Hommen, ING's chief executive, adding the group
still needed to sell its European insurance business, most
likely through an IPO next year or by early 2015, and must
complete its divestments in Asia, as well as repay the state.
ING, which received 10 billion euros ($13 billion) from the
Dutch state, has repaid the principal amount but must also pay
"We are planning another payment later this year," Hommen
said, adding that repayment in full in 2013 "is possible, but
ING U.S.'s shares were trading at $20.61 by 1740 GMT after
opening down 1 percent at $19.45 on their IPO price of $19.50.
More ING U.S. shares were sold than originally planned after
the price was cut to $19.50 from a previous range of $21 to $24.
In total 65.2 million new and existing shares were sold, raising
$600 million gross for ING U.S. and about $700 million for the
parent, ING Group.
ING Group's ownership now stands at 75 percent and will be
reduced further. Hommen said the fact the U.S. unit now has a
market value will make it easier to sell down its stake with a
view to a complete exit by 2016.
ING U.S., with around 13 million customers, provides
insurance, retirement and investment services and competes with
companies like MetLife Inc and Prudential Financial Inc
The company, led by former American International Group Inc
executive Rodney Martin, said it will change its name to
Voya Financial by 2014.
ING U.S. reported net income of $473 million last year.
The company and its rivals have been pressured by a low
interest rate environment, meaning lower returns on investment
One bright spot may be the retirement sector, as insurance
companies look to take advantage of the baby boomer segment.
"A lot of these guys are not saving enough so they have a
strong demand for retirement and savings products that ING and
others provide," said Vincent Lui, an analyst with Morningstar.
The ING IPO is the second-largest float in the United States
this year, behind Pfizer Inc's animal health spinoff
Zoetis Inc which raised $2.2 billion in January.
U.S. IPO proceeds have risen 22 percent from a year ago to
$36.9 billion as of May 1, according to Thomson Reuters data.
"Although the ING U.S. deal priced below the range, it still
underlines the health of the U.S. IPO market because large deals
can get done at respected valuations," said Josef Schuster,
founder of IPOX Schuster, a Chicago-based IPO research and
Morgan Stanley, Goldman Sachs Group Inc and
Citigroup Inc led the IPO.