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ING priced its US unit lower than expected for the second-largest IPO in the US this year

In a surprising move, the US insurance arm of the Netherlands’ ING Groep priced its IPO today at $19.50, which is lower than the share range it had announced earlier. But it increased the size of the offering by one million shares to 65.2 million shares. That suggests there was good demand for what is the second largest IPO in the US so far this year, but investors thought the price should be lower.

On April 16, ING set a price range of $21 to $24 a share. The company is raising almost $1.3 billion as part of the IPO, which will be used to reduce the parent firm’s debt. ING Groep will still have a 75% stake in its US arm, which will have the ticker symbol VOYA. The stock will start trading tomorrow on the New York Stock Exchange.

IPOs in the US have performed well this year amid a rising stock market, and many public offerings have priced at the high end of their ranges. The largest IPO this year in the US was Pfizer’s animal health unit, which raised $2.6 billion in January.

But insurance companies have faced more headwinds because of low interest rates in the US, because they depress returns on the companies’ conservative investments. And ING doesn’t offer much in terms of a dividend yield. Yet ING doesn’t have much choice in timing because it needed to sell its global insurance and investment management business to get bailout funding from the Netherlands a few years ago.

ING received €10 billion in 2008 from the Dutch government because of losses it suffered from its subprime mortgage investments in the US. Since then, ING has been working to focus its business on its home market and has been divesting of units.

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