Amsterdam-based financial services conglomerate ING has agreed to dispose of its 11.3% direct stake in Sul América, to Swiss Re Group, as part of its plans to further shrink its stake in the Brazilian insurer.
As per the terms of the agreement, the Dutch company will divest nearly 37.7 million SulAmérica units for a total cash consideration of approximately €185m at current exchange rates.
Upon completion of the transaction, ING is likely to book a net gain of approximately €100m, which represents the difference between the book value and the fair value for both the 11.3% stake in scope of the agreement and the stake retained.
ING plans to use the proceeds of this transaction to decrease its core debt.
After completion of the proposed sale, ING's stake in SulAmérica will reduce to 10%, assuming completion before year-end of a transaction under which ING agreed to sell a stake of approximately 7% to the Larragoiti family, SulAmérica's main shareholder.
In 2002, ING and the Larragoiti family formed the insurance joint venture (JV) SulAmérica, which is an independent insurance group in Brazil, with operations in several insurance lines.
As of December 2011, the Brazilain insurance firm has over 30,000 independent insurance brokers, as well as partnerships with more than 20 financial- and retail institutions, adding a further 16,000 points of sale.
The transaction, which is pending receipt of concerned regulators, is likely to conclude before the end of 2013.
In October, Zurich-based Swiss Re inked an agreement with Pacific Century Group, to acquire 12.3% stake in FWD Group, in a transaction valued at nearly $425m.
ING is planning to divest approximately 11.5% stake in its US-based retirement, investment and insurance subsidiary, as part of a strategy to streamline its operations, globally, media sources reported in October.
The Netherlands-based company, which received a €10bn bailout package during the financial crisis of 2008, is selling insurance and investment management businesses globally.
ING offers banking, investments, life insurance and retirement services, with operations mostly concentrated in China, Hong Kong, India, Japan, Malaysia, South Korea and Thailand.
Image: This picture shows the ING House on the Zuidas in Amsterdam. It forms the corporate headquarters of the Dutch multinational ING. Courtesy: Mig de Jong.
