ING priced a rights issue intended to raise 7.5 billion euros ($11.2 billion) at 4.24 euros per share, luring shareholders with a hefty discount of close to 40 percent as it looks to pay back state aid.

Europe's biggest insurer by assets will issue 1.768 billion new shares, on top of more than 2 billion shares currently outstanding, it said in a statement on Friday.

The transaction is set to become the eighth largest rights issue globally and Netherlands-based ING will use the bulk of the proceeds to repay half of the 10 billion euros in state aid it got last year to help it through the credit crisis.

The firm is splitting its operations as part of a restructuring deal with the European Commission reached following the aid payment.

The offer price represents a 52.4 percent discount to Thursday's closing price of 8.916 euros and a 37.3 percent discount to the theoretical ex-rights price.

This sounds like quite a cheap deal. They are trying to make it attractive, said Rob Koenders at Dutch asset manager Harmony Vermogensbeheer.

UK banking group Lloyds priced its rights issue at a 39 percent discount on Tuesday, while Societe Generale's issue was offered at a 27 percent discount last month.

ING is offering 6 new shares for every 7 existing shares. The subscription and trading periods for the rights run from November 30 until December 15. Any rights that have not been exercised will offered in a rump offering on December 16, ING said.

The issue is fully underwritten by syndicate of banks led by Goldman Sachs and J.P. Morgan, while Goldman Sachs, ING Bank and J.P. Morgan are joint global coordinators.

(Editing by John Stonestreet)