Dismantling of
the ING Group has moved another important step forward by two
agreements under which it will sell the majority of ING Real Estate
Investment Management (ING REIM) in two separate transactions for a
combined price of about $1.04bn.
According to ING, the
transactions are expected to result in a combined after-tax gain of
about €500m ($680m).
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ING Group CEO Jan Hommensaid:
“With these transactions we continue to deliver on our strategic
objectives of reducing exposure to real estate, simplifying our
company and further strengthening our capital base.”
The deals follow ING’s sale
of its 50% stake in ING Summit Industrial Fund, a Canadian
industrial property portfolio, in November 2010.
The sale valued Summit as a
whole at C$2bn ($2bn).
In the larger of the two
latest deals, US property management company CB Richard Ellis Group
will buy ING REIM Europe, ING REIM Asia and Clarion Real Estate
Securities (CRES), ING REIM’s US-based manager of listed real
estate securities.
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By GlobalDataCB Richard Ellis will also
acquire part of ING’s equity interests in funds managed by these
businesses.
The proceeds for these REIM
businesses and the equity interests amount to about
$1bn.
ING REIM Europe, ING REIM
Asia and CRES combined had €44.7bn ($1.35bn) in assets under
management at the end of 2010.
In the smaller of the two
deals, ING will sell the private market real estate investment
manager of its US operations, Clarion Partners, to Clarion Partners
management in partnership with US private equity firm Lightyear
Capital for $100m.
Clarion Partners has €16.5bn
has assets under management at the end of 2010.
Excluded from the latest two
deals is ING Group’s Australian property investment management
business which had AUM of €4.8bn at the end of 2010.
A portion of the Australian
business, ING Industrial Fund, is subject to an A$2.5bn ($2.5bn)
bid by a consortium led by Australian property company Goodman
Group.
In another major step in its
restructuring, ING has reported that the severing of all ties
between its banking and insurance/asset management operations were
completed at the end of 2010 and that they now operate as two
legally separate businesses.
After-tax separation costs of
€80m were expensed in 2010 with a further €200m expected in
2011.
The separation of banking and
insurance/asset management operations forms part of an agreement
with the Dutch government which in 2008 provided ING with €10bn in
assistance.
ING has still to repay some
€7.5bn of the aid.
Separation of banking and
insurance/asset management operations is also a precursor to ING’s
plan to launch two initial public offerings in 2012, one involving
its operations in the US and the other its operations in Europe and
Asia-Pacific.
According to Hommen, the
rationale for the two IPOs is that they will receive higher market
valuations as separate entities than as a combined
entity.
The future of ING’s Latin American operations has still to
be announced.
