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With its IPO in May, ING US (NYSE: VOYA ) began the long journey of operating as a solo company. Its parent company, ING Groep (NYSE: ING ) , has been divesting itself of its international segments in order to shed some weight. But with a new offering of ING US shares coming to the market, is the parent company shedding that weight too quickly?
A little history
During the early days of the financial crisis, ING Groep issued 10 billion euros in Tier 1 bonds to the Dutch government to raise needed capital. In response, the firm was required to submit a restructuring plan to show that it would reduce the size and complexity of its operations. Since 2009, when the plan was approved, ING Groep has divested itself of various international operations, separated its banking and investment/insurance divisions, and repaid over 75% of its obligations to the Dutch government -- plus interest.
For its U.S. operations, ING Groep sold the ING Direct banking division to Capital One (NYSE: COF ) in February 2012, while ING US, along with its insurance and investment operations, went public on May 2 of this year.
With 62.5 billion shares priced at $19.50 a pop, ING Groep was able to divest 25% of its holdings in the U.S. operations. This met the restructuring plan's requirements that it sell at least 25% in 2013, 50% by the end of 2014, and the remainder by 2016. Later in the month, the IPO's underwriters exercised their over-allotment option to purchase an additional 9.8 million shares at the initial offering price -- this further reduced ING Groep's stake to 71%.
Following the IPO, the standard lockout period of 180 days was put in place to prevent ING Groep from flooding the market with new shares, which would potentially lead to drops in the share price. But a new announcement from ING could prove that the lockout period's aim isn't applicable to all new offerings.
Shares, shares everywhere
Based on a new press release earlier this month, underwriters have waived the traditional lockout period to enable ING Groep to sell another chunk of its stake in ING US. Though the number and price of the new allotment has not been announced, the move shows more than just a simple divestiture on the part of ING Groep.
Since the lockout period is meant to ward off any price depreciation from the market being flooded by shares, the fact that underwriters feel comfortable providing the waiver demonstrates that there's sufficient demand for ING US stock.The price of ING US's shares has already risen 43% since the IPO but remains below book value (excluding AOCI) per share.
For investors, the fact that ING Groep is able to sell of more of its stake in ING US may not be sufficient to consider an investment in the latter. But since the company currently trades at a 34% discount to its book value, it represents a pretty good value play for investors. Of course there are more reasons than just ING US's value to consider, but the company's taken off pretty quickly since its IPO in May and is looking good as a solo operator.
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