In a strategic financial move, Voya Financial (NYSE:VOYA), Inc. has successfully completed a registered public offering, issuing $400 million in senior notes due September 20, 2034. The offering, which took place today, involves 5% Senior Notes and has resulted in net proceeds of approximately $396 million for the company after accounting for underwriting discounts and estimated expenses.
The notes, which are unsecured senior obligations, will be fully and unconditionally guaranteed by Voya Holdings Inc., a wholly-owned subsidiary of Voya Financial. Interest on these notes is set at an annual rate of 5.0% and will be payable semi-annually on March 20 and September 20, with the first payment due on March 20, 2025.
Voya Financial has stated that the net proceeds from the offering are intended for general corporate purposes. This may include the repayment of the $400 million outstanding principal amount of its 3.976% Senior Notes that are due on February 15, 2025.
The notes were issued under an indenture agreement with U.S. Bank Trust Company, National Association serving as the trustee. The indenture includes customary limitations on Voya's ability to create liens, dispose of stock in certain subsidiaries, and merge or consolidate, as well as stipulations for events of default.
The transaction was facilitated by an underwriting group led by BofA Securities, Inc., Goldman Sachs (NYSE:GS) & Co. LLC, J.P. Morgan Securities LLC, and Morgan Stanley (NYSE:MS) & Co. LLC. Legal opinions regarding the issuance were provided by Faegre Drinker Biddle & Reath LLP and Day Pitney LLP.
In other recent news, Voya Financial has agreed to acquire OneAmerica Financial Partners' retirement recordkeeping business, a strategic move set to expand Voya's footprint in the retirement planning sector.
The acquisition, which includes equity interests in two OneAmerica subsidiaries and other related assets, is expected to be completed on January 1, 2025, pending regulatory approvals.
The deal involves Voya paying an upfront consideration of $50 million, with additional contingent consideration of up to $160 million based on retained revenues and performance of transition services.
Analysts have reacted to these developments, with Evercore ISI maintaining an Outperform rating on Voya's stock and increasing its price target to $82.00. The firm anticipates that the deal will contribute over $75 million in pretax earnings and over $200 million in net revenue one year after closing.
However, Morgan Stanley downgraded Voya's stock from Overweight to Equalweight due to concerns about the performance of the Health Solutions segment.
Voya Financial also recently announced the appointment of Michael Katz as the new CFO, set to take his position on January 1, 2025. Piper Sandler reaffirmed its Overweight rating and $84.00 stock price target for Voya, following the announcement of Katz's appointment.
Barclays (LON:BARC) initiated coverage on Voya Financial, issuing an Overweight rating based on the assessment that Voya has been generating strong and consistent cash flow. These are the recent developments at Voya Financial.
InvestingPro Insights
As Voya Financial continues to navigate its capital structure and liquidity management, the company's recent performance and strategic decisions offer a deeper insight into its financial health. According to InvestingPro data, Voya Financial boasts a market capitalization of $7.52 billion, reflecting its significant presence in the financial sector. The company's Price to Earnings (P/E) ratio stands at a competitive 9.84, which when adjusted for the last twelve months as of Q2 2024, is even lower at 8.59. This suggests that Voya's earnings are strong relative to its share price, potentially indicating an undervalued stock. Additionally, Voya has experienced a robust revenue growth of 16.95% over the last twelve months as of Q2 2024, signaling a positive trajectory in its financial performance.
InvestingPro Tips highlight two key strategic moves by Voya Financial that investors might find encouraging. Firstly, Voya's management has been aggressively buying back shares, demonstrating confidence in the company's value and prospects. Secondly, Voya has raised its dividend for 6 consecutive years, showcasing a commitment to returning value to shareholders. These actions, combined with a dividend yield of 2.31% as of the latest data, could be appealing to income-focused investors. For those interested in further analysis, InvestingPro offers additional tips on Voya Financial, providing a comprehensive perspective on the company's financial standing and future outlook.
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