American International Group Inc (AIG) is seeking as much as HK$9.88 billion (US$1.27 billion) from the sale of shares in PICC Property and Casualty Co (PICC P&C), as AIG chief executive officer Peter Hancock frees up capital to repurchase more of his company’s stock.
The largest commercial insurer in the US and Canada is offering 740 million shares in PICC P&C at HK$13.06 to HK$13.35 apiece, according to terms of the deal obtained by Bloomberg News.
The price range represents a discount of as much as 8 percent to the Chinese insurer’s HK$14.20 close on Friday.
Hancock, under pressure from activist investors John Paulson and Carl Icahn to boost returns and simplify operations, announced in January that he was creating a new legacy portfolio.
That book includes about a quarter of the company’s equity and is comprised of discontinued businesses and investments that AIG plans to exit. “On the legacy portfolio, we think that the right metric for success is how quickly we can extract capital by either divestitures, reinsurance, or other efficient runoff methods without giving away too much of our book value,” Hancock said in a Jan. 26 presentation.
He plans to free up about US$9 billion as part of a two-year plan to fund US$25 billion of share buybacks and dividend payments.
AIG owned about 851 million shares in Beijing-based PICC P&C at the end of December last year, according to data compiled by Bloomberg. After the sale, AIG is subject to a 60-day lockup on its remaining stake, according to the terms. Morgan Stanley is a joint global coordinator arranging the sale, the terms show.
AIG bought about 1.1 billion shares at HK$1.80 each in the initial public offering of PICC P&C in 2003, data compiled by Bloomberg show.
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