ING seeing endgame in its plan to unload all Asian subsidiaries

ING Group NV's a la carte divestment of its investment management operations in Asia could be entering the final phase of a process marked by the seller's lack of leverage with potential buyers.

Investment bankers say ING Investment Management's operations in Taiwan and South Korea, its remaining jewels, will be the last pieces of the firm's regional lineup to attract interest in coming months, following recent sales of its money management businesses in China, Thailand and Malaysia.

Combined, proceeds for the pieces might come to little more than $250 million for a business that boasted more than $55 billion in assets under management as recently as mid-2012, said one investment banker in Asia, who declined to be named. That would be a fraction of what ING apparently hoped it could get, he added.

If so, the sum of ING Investment Management's parts in Asia would appear to be less than the whole — especially when separated from the firm's insurance operations, which have contributed a big chunk of ING IM's assets under management in a number of markets.

Investment bankers say ING's market-leading money management business in Taipei is likely to be the next business to be sold. They expect it to attract interest despite a recent trading scandal involving a vice president at the firm that ended last November with ING agreeing to pay US$8.8 million in compensation demanded by Taiwan's Labor Pension Fund.

Selling ING's business in Korea could take a bit longer — reflecting the complications of selling the firm's insurance and investment management businesses there separately. According to bankers and recruiters, ING's life insurance business in Korea accounts for roughly two-thirds of the investment management business' AUM, making it difficult to sell the investment management arm first. If a big Korean life insurer with its own asset management business buys ING's insurance business, it would likely transfer all of those insurance assets to its own manager, diminishing the value of ING's investment management business, noted one banker.

ING's Japanese and Singapore offices will be retained, but its regional hub in Hong Kong is being “wound down over time,” said spokeswoman Victorina de Boer.

Reached by e-mail, Gilbert van Hassel, ING Investment Management's CEO, wouldn't comment on whether the firm might rebuild its Asia Pacific manufacturing capabilities at some point.

An infusion of €10 billion ($13.1 billion) for ING from the Dutch government during the global financial crisis came with the stipulation that the bank would divest its insurance and investment management operations by the end of 2013.

In pursuit of that commitment, ING initially had planned a combined listing of its insurance and investment management operations in the U.S., and another listing for its European and Asian insurance and investment management business.

In January 2012, however, ING announced it would seek “other options” for its Asian insurance and investment management operations, while adding a combined listing for its European insurance and investment management operations.

The plans for the U.S. IPO did not change.

One ING Investment Management veteran in Asia, who declined to be named, said he and his colleagues had hoped for a single global listing, but investment bankers apparently had concluded there wasn't sufficient appetite from investors.

ING initially had sought a single buyer for its nine investment management operations across Taiwan, Korea, China, Japan, Singapore, Hong Kong, Thailand, Malaysia and India. Ameriprise Financial, Minneapolis, the last candidate interested in the broader business, backed out around September, confirmed one former ING executive in the region, who declined to be named.

An executive with a money management firm that has looked at ING's investment management operations in Asia said there was considerable interest in the various “chunks,” but unless a potential buyer was a total newcomer to the region, “why would anybody buy the whole thing?”

Other parent banks that were unable to find single buyers in recent years — such as Milan, Italy-based UniCredit and Frankfurt-based Deutsche Bank — ultimately opted to retain asset management as a core business segment.

ING didn't have that option.

Even as negotiations with the Dutch government to extend its divestment deadlines were underway during the second half of 2012, the process of selling the firm's investment management businesses in Asia market by market began.

Last October, ING announced an agreement to sell its 33% stake in China Merchants Fund, which has about a 3% share of China's mutual fund market, to joint venture partners China Merchants Bank Co. and China Merchants Securities Co. for €98 million.

That was followed by an announcement in November of the sale of ING's investment management business in Thailand to Singapore-based UOB Asset Management Ltd, for €10 million, and in December of the sale of ING's 70% stake in Kuala Lumpur-based ING Funds Bhd to local competitor Kenanga Investors Bhd. The selling price was not disclosed.

In November, ING's agreement with the Dutch government was amended to extend the divestment deadline, with new targets calling for 50% of ING Investment Management's operations in Asia to be sold by the end of 2013, and the remainder to be sold by the end of 2016.

The difficulties of holding onto key investment staff amid organizational uncertainty make it unlikely ING will want to prolong the process.

Executive recruiters say four or five Singapore-based employees were part of a larger group of investment professionals with ING's far-flung emerging markets debt team to leave this year for Neuberger Berman. That team manages more than US$10 billion in client assets at ING.

Alexander Samuelson, a spokes man for Neuberger Berman, declined to comment.

Meanwhile, on April 10, BNY Mellon Asset Management Japan announced it had hired a six-person Japanese equities investment team from ING Mutual Funds Management (Japan).

Both Alan Harden, the Hong Kong-based CEO for BNY Mellon's Asia-Pacific investment management business, and Douglas L. Hymas, president and CEO of ING's Japan business, described the move as a friendly one.