ING Group NV will sell a stake of more than 9% in Capital One Financial Corp. that the biggest Dutch financial-services firm acquired in the sale of its U.S. online bank this year.
Bank of America Corp., Morgan Stanley and Citigroup Inc. will jointly manage the public offering of about 54 million shares, McLean, Virginia-based Capital One said in a statement yesterday. Pricing is expected before regular trading opens today in New York, with settlement on Sept. 10, ING said in a separate statement.
ING acquired the stake, valued at about $3 billion as of yesterday, when Capital One bought ING Direct USA for $9.1 billion of cash and stock in February. The deal made Amsterdam-based ING the largest shareholder and entitled it to name a director to Capital One's board. It prevented the Dutch lender from selling the holding until the lock-up ended, according to a June 2011 statement announcing the sale.
ING shares rose 1.7% to €6.11 at 8:15 a.m. in Amsterdam trading today, giving the company a market value of €23.4 billion ($29.3 billion). The shares have increased 6% since Aug. 29, when the company announced the sale of its Canadian online bank for €2.5 billion to help repay state aid received in 2008.
Capital One shares have risen 15% since the transaction was completed in February, closing yesterday at $56.49.
The sale may result in a gain of about €200 million for ING, taking into account the strengthening of the dollar in that period and assuming a discount of 10% on the offering, said Jan Willem Weidema, an analyst at ABN Amro in Amsterdam. ING's Core tier 1 ratio will be boosted by about 20 basis points, he said.
"This is positive, even as the sale as such is no surprise seeing the lock-up period ended," Weidema said in a telephone interview. "More importantly, the stake sale creates room for ING to accept a new payment in shares from Capital One in a new transaction, for ING's U.K. online bank."
ING also last month said it was considering a sale of the U.K. unit. The firm is reviewing "non-core" banking assets after its target of repaying aid in 2012 became less certain amid Europe's debt crisis and stiffer regulatory burdens.
The Dutch bank and insurer was ordered by the European Union to sell its U.S. online bank as a condition of its government bailout during the financial crisis. The company, which received €10 billion in aid from the Netherlands in 2008, has returned €7 billion, plus €2 billion in interest and premiums.
It's "a bit surprising to us to see ING sell all shares at once," instead of gradually as many investors had expected, Jason Arnold, an RBC Capital Markets analyst, wrote in a note. While some investors may sell in the coming days, "eliminating the share overhang should be beneficial over the longer term," he wrote.
Capital One closed yesterday in New York at $56.49 and has gained 34% this year, outpacing the 20% advance by the 24-company KBW Bank Index. The shares fell as much as 2.6% in extended trading after the announcement.
