(Bloomberg) -- ING Groep NV is likely to price shares in its European insurance unit at 20 euros apiece, according to a person with knowledge of the matter, making it the third-biggest initial public offering in Europe this year.

The Dutch financial-services company is selling 70 million shares in NN Group NV for 18.5 euros to 22 euros each, the company said on June 16. Demand for shares at 20 euros exceeded the offer multiple times, said the person, who asked not to be identified as the transaction was under way. At that price, the offer will raise 1.4 billion euros ($1.9 billion) for ING.

The stock starts trading in Amsterdam tomorrow under the symbol NN. ING’s ownership in NN will drop to 73.6% after the sale and a conversion of 450 million euros in exchangeable notes under an agreement with three Asian investors, according to the statement last month.

ING is going public with the insurance arm, which has operations in Europe and Japan, after agreeing to sell global insurance and investment-management units to win European Union approval for a 2008 rescue by the Netherlands. The IPO would be Europe’s third-biggest in the most active year for share sales in the region since 2011, data compiled by Bloomberg show.

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

Discount Offer

“NN is offered at a discount, allowing investors to get into a stock with good underlying value as it offers a mix between growth and mature, cash-generating, markets in what’s broadly seen as a year of infliction for Europe,” said Lemer Salah, an Amsterdam-based analyst at SNS Securities. “Buying a European life insurer now at this level can be attractive with Europe set to recover.”

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. The Stoxx Insurance 500 Index, a gauge of 38 European insurers, advanced 0.7%.

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

Dividend Plans

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

Pretax operating profit in the ongoing businesses was 905 million 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 in the medium term and to pay a dividend of 40% to 50% of the result from 2015, according to the document. The firm plans a first 175 million-euro payout to shareholders over the second half of this year.

ING hired JPMorgan Chase & Co., Morgan Stanley, Deutsche Bank AG and ING Bank to manage the IPO, according to the prospectus. The offer period ended today at 1 p.m. in Amsterdam.

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

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