In a deal that reflects the need for large financial companies to raise cash, ING announced the sale its ING Advisor Network, including three of ING’s five broker-dealers: Financial Network, Multi-Financial Securities and PrimeVest to Lightyear Capital.

The sale by ING was highly anticipated but Lightyear, a New York-based private equity company, was a surprise buyer. Lightyear, founded by former Paine Webber chief executive officer Don Marron, specializes in financial services companies. At this time, Marron says, he has no plans to merge the three broker-dealers into a single firm. “Each of these entities has a particular market and great strengths,” he said in an interview with Financial Planning. “We’re comfortable with the current structure.”

Valerie Brown will continue as chief executive officer of the network after the acquisition closes, which is expected to occur in the first quarter of 2010. ING will retain ING Financial Advisers and ING Financial Partners.

In a telephone interview with Financial Planning, Brown said that ING advisors will benefit from new ownership and that there will be no sudden changes to explain to clients. “I know what’s on the minds of advisors,” Brown said. “Let me emphasize that Financial Network, Multi-Financial Securities and Primevest are keeping their names. There will be no restructuring, and no repapering of accounts.” In addition, Primevest will continue to be self-clearing while Financial Network and Multi-Financial continue their clearing relationship with Pershing.

What is up for renewal, Brown said, is recruiting, which was in abeyance since April, when ING put the Advisor Network up for strategic review. “We are ready to move forward immediately and begin a full focus on recruiting again,” Brown said. “Lightyear thinks our platforms are very strong to recruit to, and our field operations are poised for growth.” She also plans to upgrade the technology for the group, particularly its advisory platform.

Once the deal closes, the ING Advisor Network will be rebranded and its headquarters will move to El Segundo, California. Brown herself will relocate from Atlanta.

Because Lightyear is a private equity company, industry observers assume that they will not hold onto the ING Advisor Network indefinitely. When asked about a time frame for remaining in the Lightyear fold, Brown responded that typically Lightyear holds firms for five years with a five-year extension when appropriate.

However, Brown added: “They recognize that it is in their and their investors’ best interest to really get the focus on setting this collective group of broker-dealers up for great growth, and getting that under our belt for a while before thinking about the next step. I have gotten to know Don Marron and the Lightyear senior team during this process. They are very good and very smart listeners and have a lot to contribute to our success.”

The transaction is one more instance in which an oversized financial conglomerate has had to shed businesses to raise cash, observes Alois Pirker, research director at the Aite Group. “Ultimately, there’s opportunity here and clearly Lightyear is moving in on it,” he says. “ING clearly needs to sell, but it’s hard to find a good buyer where the units are a strategic fit. They obviously found a private equity firm that’s ready to jump in and can bring the broker-dealers to a new home. In order to get a good price you need time, and ING didn’t have that.”

The deal was announced at 2:30 AM Eastern Time, before the opening of the Benelux stock exchange this morning, said Dana Ripley, a spokesperson for Dutch-based ING. But the terms of the agreement weren’t disclosed. Lightyear’s Lightyear Fund II, LP will be the actual buyer of the ING units.

The three broker-dealers are all on the FP 50 list of the largest broker-dealers ranked by revenues. Financial Network is No. 11 and based in El Segundo, Calif.; St. Cloud, Minn.-based PrimeVest is No. 26 and Multi-Financial is No. 31 and based in Denver, Colo. Together, for the twelve months ended June 30, 2009, they reported gross revenues of approximately $653 million with account assets of $70.2 billion. The units had roughly 5,700 representatives as of June 30, 2009.