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ING scraps Asian insurance IPO

by Renee Cordes  |  Published January 12, 2012 at 10:15 AM ET
JanHommenING.jpgDutch financial services group ING Groep NV Thursday, Jan. 12, scrapped the planned IPO of its combined Asian and European insurance activities, opting instead to consider the potentially more lucrative sale of the Asian business.

"Given the uncertain economic outlook and turbulent financial markets, especially in Europe, ING has decided to explore other options for its Asian insurance and investment management business," ING CEO Jan Hommen said in a statement.

Speaking to journalists, Hommen added that the Asian assets had attracted "strong interest" but that ING hadn't yet entered talks with any bidders.

ING said it will continue preparations to split off its European insurance activities, "including an IPO." (It wasn't immediately clear if ING is also exploring other options for the European arm). Its U.S. IPO remains on track. The company has taken its time to prepare the listings, repeatedly saying it will proceed only when market conditions are favorable.

"ING is committed to conducting these processes with the utmost diligence in the interests of all stakeholders, including customers, employees, distribution partners and shareholders," Hommen said.

Investors welcomed ING's shift in strategy, sending ING shares up 5.6% in early afternoon trading on the Euronext exchange to €6.31, for a total market value of just under €24.2 billion ($30.9 billion).

Lemer Salah, an analyst with SNS Securities NV in Amsterdam, said the decision not to do a combined Asian and European IPO makes sense due to the uncertain economic outlook for Europe. "At the end of last year ING tried to sell some European activities in Belgium, but the offers were really low, so it makes sense to sell the more attractive Asian activities separately."

He expects interest from potential suitors to be high, either from local players if ING chooses to sell on a market-by-market basis or from foreign investors, should ING decide to put up its entire Asian insurance portfolio for sale. This has a book value of about €4.9 billion, compared with a €9.5 billion book value for its European insurance activities.

The analyst recommends buying ING shares, with a price target of €10.

The Amsterdam-based group was ordered by European Union regulators to slash its balance sheet by 45% between 2008 and 2013 in return for receiving €10 billion worth of state aid at the outbreak of the global financial crisis. It has repaid €7 billion of the total bill so far.

Late last month, ING finalized the sale of its South American pensions, life insurance and investment operations to Columbia's Grupo de Inversiones Suramericana SA, known as Gruposura, for about €2.68 billion.