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May 29, 2014 at 08:11 AM
(Bloomberg) — ING Groep NV will try to execute Europe’s biggest initial public offering this year even as investor demand declines and competing share sales increase.
The largest Dutch financial-services company is seeking to value its European insurance unit NN Group NV at as much as 8 billion euros ($11 billion) in a transaction that may raise as much as 2 billion euros, according to three people with knowledge of the matter. The IPO may be announced as early as next week, said the people, who asked not to be named as the details aren’t public.
The deal, on the heels of Lloyds Banking Group Plc announcement’s this week that it will sell 25 percent of its TSB consumer bank, comes amid declining investor demand and growing IPO supply. Last week was Europe’s busiest for IPOs in 2014, data compiled by Bloomberg show, even as U.K. insurance provider Saga Plc priced its sale at the bottom of an offered range and retailer Fat Face Group Ltd. canceled its offering.
“At this point there are many IPOs so supply exceeds demand, and therefore as an investor you can get a higher discount,” said Corne Aben, who helps manage about 1.5 billion euros, including ING shares, at Amsterdam-based Optimix Vermogensbeheer NV. A spinoff would be a better option for ING shareholders, he said.
ING rose as much as 0.5% to 10.26 euros, reaching the highest level in two weeks, and traded little changed at 9:57 a.m. Amsterdam time.
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Shares of companies that have gone public in Europe this year have underperformed the wider market. The Bloomberg European IPO Index, which tracks companies that have sold shares, has risen by 0.5 percent in 2014, compared with a gain of 5 percent in the STOXX Europe 600 Price Index.
Voya Financial
Still, there may be long-term demand for insurance companies. The NN Group sale comes after Amsterdam-based ING reduced its ownership in the U.S. unit, now named Voya Financial Inc., to about 43 percent. Shares in Voya have advanced about 90 percent since they were sold at $19.50 apiece in May 2013.
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