AIG Sells Remaining Stake in AIA Group

on Dec 17, 2012

American International Group (NYSE:AIG) has begun the process of selling its remaining stake in AIA Group (HKG:1299) in a deal that should raise almost $6.4 billion (£3.95 billion) and put an end to the US insurer’s participation in the Hong Kong-based company.

The American insurance giant is selling its 13.7 percent stake in AIA at between 29.65 and 30.65 Hong Kong dollars, according to bankers familiar with the deal. The price represents a discount of 3.2 to 6.3 percent to Friday’s closing price of 31.60 Hong Kong dollars. The shares were suspended from trading on Monday. AIG chief executive officer Robert Benmosche has decided to focus on the group’s core businesses such as US life insurance and global property-casualty insurance while divesting from non-essential units. “We’re looking for the right time and the right price to monetize our ownership of AIA,” Benmosche said on a 3 August conference call with analysts. “We have a very good performing company out there.”

AIG has been reducing its stake in AIA for two years now, starting with the listing of the Asian insurer on the Hong Kong Stock Exchange following a failed acquisition bid from London-based rival Prudential. The listing reduced the American company’s ownership in AIA to about a third of all the shares and raised more than $20 billion (£12.3 billion). AIA shares have soared by more than 60 percent since its initial public offering. The Financial Times reported that in September AIG sold a further $2 billion (£1.23 billion) worth of shares that attracted a rare premium.

AIG expects the AIA shares to be priced on 17 or 18 December and trading must resume no later than the 18th of December. The placement of the 13.7 percent stake or about 1.65 billion shares would be the biggest block trade in Asia this year and the fourth involving AIA. The deal will be managed by Deutsche Bank and Goldman Sachs with JPMorgan, Citi and Morgan Stanley acting as bookrunners. According to a banker familiar with the deal and quoted by the FT, the book was already “well covered” by late Monday morning in Hong Kong.

**US Treasury Completes Final Sale of AIG Stake**
!m[Treasury Department Sells All of Its Shares in American Insurer](/uploads/story/1042/thumbs/pic1_inline.png)On Friday last week the US Treasury Department said it has completed its final sale of common stock in AIG, which means it no longer has any ownership in the American insurer. According to Reuters the Treasury received $7.6 billion (£4.7 billion) in proceeds from the sale of the remaining 234 million shares at $32.50 per share. The overall return on the bailout money provided from the Treasury and the Federal Reserve amounts to $22.7 billion (£14 billion). “Today officially begins a new chapter at AIG,” Mr Benmosche said in a statement.

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AIG was bailed out on the grounds of being “too big to fail” shortly after Lehman Brothers filed for bankruptcy and Merrill Lynch was acquired by Bank of America. The US government said it has already recovered more than 90 percent or $380 billion (£234 billion) of the $418 billion (£258 billion) disbursed under its Troubled Asset Relief Program (TARP).
**AIG Share Price**
In afterhours trading and ahead of the opening bell on the New York Stock Exchange shares in AIG were 1.62 percent higher at $34.49.

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