--AIG sells final stake in Asian insurer AIA Group
--AIG raises $6.5 billion from stake sale
--Share sale is second-largest in Asia this year, according to
Dealogic
(Revises throughout, adds details and background)
By Prudence Ho and Fiona Law
HONG KONG--American International Group Inc. (AIG) has sold its
final stake in Asian insurer AIA Group Ltd. (1299.HK), raising
around US$6.5 billion and ending a relationship that stretched back
to Shanghai in 1919.
For fast-growing AIA, which operates in 16 Asian markets, the
sale marks a new beginning as a Hong Kong-listed company that is
fully owned by the public.
"This latest divestment of the remaining holding is noteworthy
in AIA's history since it marks the end of AIG's shareholder
interest in AIA," AIA Chief Executive Mark Tucker said in a
statement Tuesday.
AIG has shed assets, including AIA, in recent years to repay
loans from the U.S. government, which effectively took over the
company in a $182 billion bailout at the height of the 2008
financial crisis. AIG paid off its debt to the U.S. Treasury last
week.
AIG sold around two-thirds of AIA in an initial public offering
in Hong Kong in October 2010, raising US$20.5 billion. It also
raised a total of US$8 billion in two block sales this year.
Including this week's block sale, it has now raised US$35 billion
from selling AIA.
In March 2010, the U.K.'s Prudential offered US$35.5 billion in
cash and stock for all of AIA, then cut the offer to US$30.4
billion. AIA rejected it.
AIG priced the shares this week near the top end of the range,
indicating strong demand. It sold 1.65 billion shares at HK$30.30
each, AIA said. That makes it the region's second-biggest share
sale this year, after Japan Airlines Co.'s US$8.5 billion initial
public offering in September, according to Dealogic.
The block sale began Monday and ended overnight. The shares were
sold at a 4.3% discount to AIA's closing price of HK$31.65 Friday,
but well above AIA's IPO price of HK$19.68 a share.
The latest sale will remove the overhang from AIA's shares, said
Mizuho Securities Asia Ltd., which maintains a "buy" rating on them
due to expectations of strong premium growth and profitability.
AIA shares have climbed 27.8% this year, reflecting strong
growth and new exposure to Malaysia. In October, AIA agreed to buy
ING Groep NV's Malaysian life insurer in a $1.73 billion deal that
was approved Monday.
In July, AIA reported that net profits grew 10% on year in the
six months ended June 30. Its business value, a key measure of
profitability, climbed 28% during the same period.
At 0400 GMT, AIA's Hong Kong-listed shares were down 2.0% to
HK$31.00 after resuming trading early Tuesday. Trading in its
shares was suspended Monday.
AIG, once a leading seller of property-casualty and life
insurance around the globe, ran into financial trouble primarily as
a result of complex financial instruments sold to other financial
firms. That led to the U.S. rescue.
Last week, it said it was selling up to 90% of an
airplane-leasing business to a Chinese consortium.
The sale of AIA shares comes just days after the U.S. Treasury
sold the last of its AIG shares for $7.6 billion, raising its
profit from the bailout to $22.7 billion. It still holds warrants
to buy 2.7 million shares.
AIG isn't done with Asia. It said last month that it plans to
form a joint venture with the life-insurance unit of People's
Insurance Co. (Group) of China Ltd., China's largest property and
casualty insurer.
It also bought US$500 million worth of shares in PICC's initial
public offering last month.
Deutsche Bank AG and Goldman Sachs Group Inc. are among banks
handling the share sale, along with Citigroup, J.P. Morgan Chase
& Co. and Morgan Stanley, people familiar with the situation
said earlier.
Write to Prudence Ho at prudence.ho@wsj.com and Fiona Law at
fiona.law@wsj.com
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