(Bloomberg) -- ING Groep NV is likely to price shares in itsEuropean insurance unit at 20 euros apiece, according to a personwith knowledge of the matter, making it the third-biggest initialpublic offering in Europe this year.

The Dutch financial-services company is selling 70 millionshares in NN Group NV for 18.5 euros to 22 euros each, the companysaid on June 16. Demand for shares at 20 euros exceeded the offermultiple times, said the person, who asked not to be identified asthe transaction was under way. At that price, the offer will raise1.4 billion euros ($1.9 billion) for ING.

The stock starts trading in Amsterdam tomorrow under the symbolNN. ING’s ownership in NN will drop to 73.6% after the sale and aconversion of 450 million euros in exchangeable notes under anagreement with three Asian investors, according to the statementlast month.

ING is going public with the insurance arm, which has operationsin Europe and Japan, after agreeing to sell global insurance andinvestment-management units to win European Union approval for a2008 rescue by the Netherlands. The IPO would be Europe’sthird-biggest in the most active year for share sales in the regionsince 2011, data compiled by Bloomberg show.

ING agreed to sell more than half of NN by the end of next yearand complete the disposal by the end of 2016. The offer of 70million shares represents a fifth of total, ING said in the earlierstatement. At a price of 20 euros apiece, NN would be valued atabout 7 billion euros, or below book value, in line with theaverage estimate of three analysts surveyed by Bloomberg News.

Discount Offer

“NN is offered at a discount, allowing investors to get into astock with good underlying value as it offers a mix between growthand mature, cash-generating, markets in what’s broadly seen as ayear of infliction for Europe,” said Lemer Salah, anAmsterdam-based analyst at SNS Securities. “Buying a European lifeinsurer now at this level can be attractive with Europe set torecover.”

ING shares rose 1.5% to 10.42 euros at 1.08 p.m. in Amsterdam,giving the company a market value of about 40 billion euros. TheStoxx Insurance 500 Index, a gauge of 38 European insurers,advanced 0.7%.

Victorina de Boer, a spokeswoman for ING, declined to comment onthe pricing.

Dividend Plans

NN was the biggest life insurer in the Netherlands based on 2012gross written premiums, and the largest provider of mandatorypensions in Poland and Romania, according to a prospectus publishedon June 17.

Pretax operating profit in the ongoing businesses was 905million euros last year and 295 million euros in the first quarter.NN plans to expand earnings on that basis by 5% to 7% on average inthe medium term and to pay a dividend of 40% to 50% of the resultfrom 2015, according to the document. The firm plans a first 175million-euro payout to shareholders over the second half of thisyear.

ING hired JPMorgan Chase & Co., Morgan Stanley, DeutscheBank AG and ING Bank to manage the IPO, according to theprospectus. The offer period ended today at 1 p.m. inAmsterdam.

Next to the NN Group disposal, ING still has to sell itsremaining stake of about 43% in Voya Financial Inc. in the U.S. Thefirm, that will continue as a Europe-focused bank after completingits restructuring, on June 27 said it sold a remaining 10% stake inBrazil’s Sul America SA through a block trade for about 170 millioneuros.

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