Posted - 09 Aug 2012 17:12 GMT
updated - 09 Aug 2012 17:32 GMT
Pomona to buy portfolio from parent ING
The completion of the $722m deal depends in part on Pomona's ability to finish fundraising on one of its investment vehicles, according to a public filing.
Pomona Capital is buying a portfolio of LP commitments from its parent company ING for about $722 million.
The fund stakes are being sold at a discount to net asset value, according to three people with knowledge of the deal, though it is unclear what discount was agreed. Pomona did not return calls and emails for comment this week and ING declined to comment about the discount.
Several sources have characterised the deal as unusual because Pomona is buying the very same assets it has managed for ING as the company’s private equity arm. Pomona is a wholly owned subsidiary of ING.
The transaction, which was announced in a June Securities and Exchange Commission filing by ING, represents about 57 percent of the private equity portfolio in ING's general account as of 31 March 2012. The sellers are insurance company subsidiaries of ING that want to reduce exposure to the asset class, the filing said.
“We anticipate that the transaction will release risk-based capital in the selling insurance companies, in light of the high capital charge associated with the asset class, and improve liquidity and reduce earnings volatility,” the company said in the filing. ING said in the filing it expected the deal to produce a $93 million net loss in the second quarter for ING US Inc.
The deal is expected to close in two tranches prior to 31 December 2012, with the second tranche executing after “one of the buyer funds has completed a fundraising effort”, the filing said. It’s not clear what fundraising effort the filing is referring to, though Pomona has talked to LPs about raising its eighth fund, targeting $1.3 billion, according to two people with knowledge of the firm.
Pomona closed its seventh fund on $1.3 billion in 2009.
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