A couple of weeks ago I mentioned that the upcoming NN Group IPO (sale by ING) looked quite attractive:
'So what price this? Well with a mid-range implied market cap of c. Euro6bn the company is indicated to float at around x0.5 book...which seems cheap given the either side of 9% RoE noted above'
Well the share formally lists today after the confirmation of a successful sale:
'NN, the insurance arm of Dutch lender ING, has raised €1.5bn in one of the largest European flotations of the year.
ING is having to sell NN as a condition of the state bailout it took during the financial crisis.
About 77m shares were sold for €20 each - the middle of range of €18.50 to €22 the company had set, though the amount was higher than the 70m originally planned'
I expect the opening to be quite strong but even factoring in that ING are ultimate sellers of more of their retained 74% stake. As with Voya (the US ING successful spin-off) I see good medium-term value.
Applying a 20% discount (reflecting the overhang above) to what I regard as a fair fundamental value (x0.9 book for a 9% RoE) the target I get for NN Group shares is just over Euro28. Even with a big start today embracing the opportunity still seems the order of the day (at least in my view).
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