Too-big-to-fail AIG was kept afloat by a US$182.5 billion (RM567.57 billion) rescue by the US government in September 2008, at the height of the global financial crisis. Since then, it has been exploring options to repay the government, mainly by selling some of its key assets, including AIA.
In March, Prudential plc had offered US$35.5 billion in cash for AIA but had revised its offer downwards to US$30.4 billion following shareholder backlash, as they had viewed it expensive and risky. AIG’s board voted against the lower offer from Prudential and chose to publicly float is crown jewel in Asia — AIA.
AIG will sell about half of AIA in an initial public offering (IPO) that is slated to take place in Hong Kong at the end of this month.
It was reported that AIG had originally planned to sell shares in AIA Group at a level that would value the company at US$35 billion to US$37 billion, but the Kuwait Investment Authority — one of the cornerstone investors — agreed to sign on as an investor only after the value of the IPO was set at about US$30 billion.
Tourists look at a view in the Bank of China Tower opposite to AIA Central, previously AIG Tower, at Hong Kong’s financial Central district. AIG will sell about half of AIA in an IPO slated to take place in Hong Kong at end-October.
Kuwait Investment Authority is understood to have given a US$1 billion commitment for the IPO.
Last Thursday, AIG unveiled a plan to disentangle itself from the US government which bailed it out two years ago.
The exit plan involves the Treasury Department converting US$49.1 billion in AIG preferred shares it now holds into AIG common stock. Also under the exit plan, cash proceeds from the listing of AIA and a separate sale of another overseas unit will be used to repay AIG’s US$20 billion secured debt from the New York Federal Reserve.
This article appeared in The Edge Financial Daily, October 6, 2010.
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