American International Group Inc (AIG), which received a US$182.3 billion bailout after the collapse of Lehman Brothers Holdings Inc, is selling US$6 billion of AIA Group Ltd shares to pay back the US government.
The New York-based insurer, majority owned by the US, is offering about 1.7 billion AIA shares at HK$27.15 to HK$27.50 a share to institutional investors who weren’t identified, according to a sales document obtained by Bloomberg. AIG will hold about 19 percent of AIA after the stock sale.
AIG was rescued in September 2008 as it was forced to pay out insurance on mortgage-linked assets after the bankruptcy of Lehman, the biggest underwriter of mortgage-backed securities. The AIA share sale also helps remove some investor concerns a bulk sale of AIG’s stake may damp the stock of the Asian insurer.
AIG sold about two-thirds of the Hong Kong-based life insurer in a 2010 initial public offering. Its stake before the latest share sale has a market value of about US$15 billion, which is part of the collateral backing obligations to the US Treasury. Chief executive officer Robert Benmosche said last month that AIG might wait to sell its AIA stake and use the money to reduce the government’s 77 percent ownership.
The company has sold more than US$50 billion in assets to repay the government rescue, AIG chairman Steve Miller said in a Bloomberg Television interviewed aired on Feb. 3. The insurer will decide when “the timing is right” to get rid of its AIA stake or buy more shares.
The offering price represented a discount of as much as 7 percent on the Hong Kong-based insurer’s closing price of HK$29.20 on March 2. The sale is expected to be priced no later than tomorrow, according to an AIA statement to Hong Kong’s stock exchange.
AIG held 3.96 billion shares, or a 33 percent stake, in AIA as of May 31, according to the latter’s interim report last year. The US company has agreed not to sell its remaining shares in the Asian insurer for another 180 days, according to the sales document yesterday.
AIG sold a Taiwanese unit, Nan Shan Life Insurance Co (南山人壽), for US$2.16 billion last year. In 2010, it sold American Life Insurance Co to MetLife Inc for about US$16 billion.
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