AIG Plans US$5B-US$10B HK IPO For AIA In 1Q10 -Source
May 13, 2009 23:18:55 (ET)
(Adds details of sale, background on previous attempt to sell AIA assets and government bailout of the insurer.)
HONG KONG (Dow Jones)--American International Group Inc. (AIG) plans to spin off its Asian life insurance unit in a US$5 billion-US$10 billion Hong Kong initial public offering in the first quarter of next year, a person familiar with the situation said Thursday.
The cash-striken insurer will likely sell 25%-to-a-third of American International Assurance Co., and maintain majority control of the operation, the person added.
In two-to-three weeks, AIG will be sending out its RFPs, or requests for proposal, to investment banks, on the basis of which it will select bankers on the deal, the person said. The RFPs generally signal the start of the IPO process.
AIG couldn't immediately be reached for comment.
AIG earlier this year dropped a plan to sell as much as a 49% stake in its Asian life-insurance arm due to a lack of substantial bids for the assets. Manulife Financial Corp., Prudential PLC and Singapore's sovereign wealth fund Temasek Holdings Pte. Ltd. were close to bidding for the assets, which bankers had valued at between US$20 billion-US$30 billion then.
In early March, the U.S. government boosted its investment in AIG, providing the company with an additional US$30 billion in capital while the Fed and the Federal Reserve Bank of New York took up a $26 billion preferred interest in Asia-based American Life Insurance Co. as well as AIA. Following that bailout, AIG said it will continue looking for buyers for its units that are already up for sale and will continue reviewing its options for other units, which may include a public offering.
AIA has around 200,000 agents in 15 markets in the region, excluding Japan.
The IPO, if it goes ahead, will reap bigger gains for AIG than an ongoing sale of its Japanese headquarters to Nippon Life Insurance Co. for US$1.2 billion, currently AIG's largest divestment aimed at raising funds to repay the U.S. government.
The U.S. government provided AIG with an US$85 billion loan in September. As market conditions worsened and losses piled up at the insurer, the government expanded its loan package several times.
The package of loans now totals nearly US$180 billion after being expanded in March when AIG reported a fourth-quarter loss of US$61.7 billion, the largest-ever quarterly corporate loss in U.S. history. As part of the package, the government has taken a roughly 80% stake in the insurer.
-By Amy Or, Dow Jones Newswires; 852-2832 2335; amy.or@dowjones.com
(END) Dow Jones Newswires
May 13, 2009 23:14 ET (03:14 GMT)
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