ING Direct 2013 Annual Report Download - page 236

Notes to the consolidated annual accounts of ING Group continued
59 OTHER EVENTS
ING U.S.
IPO of ING U.S. in May 2013
In May 2013, ING sold approximately 65.2 million ordinary shares in the Initial Public Offering (‘IPO’) of ING U.S., Inc., its U.S.-based
retirement, investment and insurance business (‘ING U.S.’). Furthermore, on 29 May 2013, the underwriters of the IPO exercised in full their
option to purchase approximately 9.8 million additional shares of ING U.S. from ING Group.
The total net proceeds of these transactions were EUR 1,061 million (USD 1,385 million). The IPO reduced the ownership of ING in ING
U.S. from 100% to 71.25%.
These transactions did not impact the profit and loss account of ING Group, as ING U.S. continued to be fully consolidated. The
transactions had a negative impact of EUR 1,894 million on Shareholders’ equity (parent) of ING Group, including EUR 19 million
transaction costs after tax. This amount reflected the difference between the net proceeds of this offering to ING Group and the IFRS-EU
book value of the 28.75% interest divested in this IPO. This amount was recognised in ‘Other reserves’.
Minority interests at that date increased with EUR 2,954 million due to the IPO of ING U.S. This amount represented 28.75% of the net
asset value under IFRS-EU of ING U.S.
As a result, the total impact on ING Group’s Total equity was EUR 1,060 million.
Second tranche sale in October 2013
In October 2013, ING sold approximately 33 million ordinary shares in ING U.S. at a price of USD 29.50 per share. Furthermore, the
underwriters exercised in full their option to purchase approximately 4.95 million additional shares of ING U.S. from ING Group.
These transactions closed on 29 October 2013. ING Group is subject to a lock-up period of 90 days from 24 October 2013.
The total net proceeds of these transactions were EUR 786 million (USD 944 million). As a result, ING’s ownership interest in Insurance ING
U.S. was further reduced from approximately 71.25% to 56.7%.
These transactions did not impact the profit and loss account of ING Group. These transactions had a negative impact of EUR 632 million
on the Shareholders’ Equity (parent) of ING Group, including EUR 26 million transaction costs after tax. This amount reflects the difference
between the net proceeds to ING Group and the IFRS-EU carrying value of the 14.5% stake divested through these transactions. This
amount was recognised in ‘Other reserves’.
Minority interests increased with EUR 1,394 million due to these transactions. This amount represents 14.5% of the net asset value under
IFRS-EU of ING U.S.
The total proceeds of the transactions in May and October was EUR 1,847 million (USD 2,329 million). These transactions did not impact
the profit and loss account of ING Group. These transactions had a negative impact of EUR 2,526 million on Shareholders’ equity (parent)
of ING Group that was recognised in ‘Other reserves’. Minority interests increased with EUR 4,348 million due to these transactions. This
amount represents 43.3% of the net asset value under IFRS-EU of ING U.S. Reference is made to Note 14 ‘Equity’.
Classification of ING U.S.
In light of ING’s intention to divest its remaining stake in ING U.S. over time Insurance ING U.S, is classified as held for sale and
discontinued operations in 2013. Reference is made Note 12 ‘Assets and liabilities held for sale’ and Note 36 ‘Discontinued operations’.
ING Group is divesting its insurance and investment management businesses as part of the amended Restructuring Plan agreed with the
European Commission. ING intends to divest its remaining stake in ING U.S. over time, in line with the timeline set out in the amended
Restructuring Plan as disclosed in Note 58 ‘Related parties’.
Upon a future transaction that results in the deconsolidation of ING U.S. by ING Group, a divestment loss will be recognised in the profit
and loss account. This loss will reflect ING Group’s remaining share (at the transaction date) in the difference between the carrying value of
ING U.S. and the fair value, plus ING Group’s share in unrealised revaluations in equity plus the currency translation reserve related to ING
U.S. Reference is made to Note 60 ‘Subsequent events’.
ING Japan
After carefully exploring and evaluating the options available for the divestment of ING Life Japan, it was concluded that a standalone
divestment of ING Life Japan, including its Corporate Owned Life Insurance (COLI) and Closed Block VA businesses, is not feasible in a manner
that would appropriately meet the demands of regulators and other interest holders in ING Group and ING Life Japan. Therefore, ING Life
Japan will be included with ING’s European insurance and investment management businesses in the base case IPO of NN Group in 2014.
As a result, ING Life Japan and the Japanese Closed Block VA guarantees reinsured to ING Re (‘ING Japan’) are no longer classified as held
for sale and discontinued operations. The individual assets and liabilities of ING Japan are therefore classified out of Assets and liabilities
234 ING Group Annual Report 2013