ING Gets Wiggle Room On Insurance Sell-Off
March 3, 2010 by N/A
* EU ruling gives it past 2013 deadline for asset sales
* Requires a partial sale first through an IPO process
* Analysts see business fetching 15 bln euros or more
AMSTERDAM, March 2 (Reuters) – Dutch financial services group ING (ING.AS)(ING.N) said it can potentially extend the sale of its worldwide insurance business beyond a 2013 deadline as long as it kicks off the process with a stockmarket listing.
Analysts said any delay could potentially help ING get a better price for its assets as markets improve.
ING, which is splitting up its insurance and bank operations and selling assets as part of European Commission approval for its state aid, may get more time if it has sold at least 30 percent of the assets earmarked for sale through an initial public offering (IPO), the spokesman said.
An ING spokesman cited an EU document, posted last week, which detailed the extension in a footnote.
“Whenever a divestment is being undertaken by an IPO process which has commenced and significant (30 percent or more) share placements have been made prior to the end of the divestment period, the Commission (in consultation with the Dutch State, ING and the Trustee) will actively consider allowing the entity more time to place remaining shares,” the document said.
ING shares fell 1.5 percent to 6.84 euros by 0915 GMT, underperforming a 0.8 percent decline in European insurance shares .SXIP. The stock rose almost 6 percent Monday to lead the sector.
ING has to sell some Dutch mortgage activities, ING Direct USA, and its insurance arm after getting 10 billion euros ($13.5 billion) in Dutch state aid in 2008 and state guarantees on 21 billion euros worth of U.S. credit assets.
ING, together with the Dutch state, has asked the Commission to review how it had calculated the amount of state aid the group received and certain competition restrictions placed on it. [ID:nLDE60R2R5]
That review, ING said, could potentially lead to the penalties against it being lessened. Top of its list in that case would be keeping ING Direct USA, the U.S. online bank on which it has lavished praise.
MOVING AHEAD WITH SALES
The Dutch group, which paid back half of the state aid in December, said last month it was preparing public offerings for the assets it needs to sell but also kept open the option to sell assets directly to other parties.
ING has made clear since the late October announcement of its restructuring that it preferred an IPO rather than a trade sale for the insurance unit. Chief Executive Jan Hommen has said his top choice was a single IPO of the whole global business.
Last month, however, he said it was possible there could be two or more IPOs.
Analysts generally expect ING to receive proceeds of 15 billion euros or more for the insurance divestiture. Monday’s blockbuster deal between AIG and Prudential for AIG’s Asian business was also seen as supportive of ING’s plans and its potential valuation. [ID:nLDE60K0L0]
Analysts said on Tuesday the potential delay in selling off the entirety of the insurance business — the world’s sixth largest — could only benefit the firm.
“By the new decision, ING will get more time, which will increase the chances of a better price,” SNS Securities analysts said in a note. (Reporting by Gilbert Kreijger and Ben Berkowitz; Editing by Louise Heavens) ($1=.7395 Euro)
