Bank of China

ING may be first Dutch company with HK flotation

PUBLISHED : Monday, 02 May, 2011, 12:00am
UPDATED : Monday, 02 May, 2011, 12:00am

ING Group's plan to list its insurance arms in two initial public offerings has led brokers to speculate it may well follow its peer AIA and choose Hong Kong, becoming the first Dutch firm to launch an IPO here.

In 2009, ING said it would split its banking and insurance businesses with an IPO for its United States insurance business and another for its Asia and European units.

Details are being worked out by a team at its headquarters, and the IPOs are scheduled to take place by 2013.

The company said it opted for two IPOs in part to speed up the process but also because different regulations apply in the US and Europe.

Frank Koster, chief executive of ING Insurance Asia, said the split and listing plans would allow the group to become more focused and have a simplified structure.

'I am not the one who decides where the IPOs will take place,' he said.

'I understand Hong Kong is a very attractive market, but it is not my decision. The head office is preparing the IPOs, and they will decide where they will take place.'

Joseph Tong Tang, executive director of Sun Hung Kai Financial, said the Hong Kong stock market would be a potential venue for ING, particularly its Asia and European unit.

'Hong Kong has been the largest IPO market in the past two years,' he said.

'Prudential and AIA Group both chose to list in Hong Kong last year. This showed Hong Kong has deep liquidity to attract big insurance companies.'

Tong said the Singapore stock market was not as active as Hong Kong's in competing for IPOs, while Japan, another major market in Asia, has suffered from the earthquake.

Another choice would be Shanghai's proposed international board, but that has not yet been launched.

'If it wants to be listed in Asia, then Hong Kong is the first choice for ING,' Tong said.

'Hong Kong investors should also welcome its listings, as AIA's IPO received a very positive response.''

Last year, AIA, Asia's biggest insurer in terms of premium income, raised HK$159.1 billion in what was Hong Kong's largest initial public offering. It broke the US$16.1 billion record set by Industrial and Commercial Bank of China for the H-share portion of its float in 2006.

Louis Tse Ming-kwong, director of VC Brokerage, said ING is a well-known brand in Asia, which would attract retail investors to the IPO.

'I believe they would consider listing in Hong Kong. The Hong Kong government and Hong Kong Exchanges and Clearing have encouraged overseas firms to list in the local market. We do not have any Dutch company listing here, and ING would potentially be the first.'

Koster said the group has almost repaid the Dutch government's Euro10 billion (HK$115 billion) rescue package given during the global financial crisis. Thus, the IPO proceeds would not be used to repay government debt. Instead, they would be used for its development in Asia and Europe.

ING operates in 17 countries and regions, including Hong Kong, the mainland, Japan and South Korea.

'We believe in offering good products through a broad distribution of agents and banking networks for our customers,' Koster said.

'The wealth created in Asia is building a middle class that is better-educated and earning more money than their parents.

'They are looking for insurance as protection for their lifestyle, as well as for saving or investment purposes.'

In December 2009, China Construction Bank announced it would buy half of Pacific-Antai Life Insurance from ING. In May last year, Bank of Beijing received approval for a 50 per cent stake in ING-BOB Life Insurance after acquiring the shares from Beijing Capital Group, which was in the joint venture with ING.

These deals are part of the group's plan to simplify its structure.

Koster said the joint venture with Bank of Beijing would be the flagship for ING Insurance to develop in China.

In Hong Kong, it has 1,500 agents and banking partners, a distribution model that Koster said would continue to drive growth in the following years.