In jumbo deal, AIG sells stake in AIA for $6.5 bn
The sale, which priced near the top of its indicative range, marks the end of an era for AIG in Asia and its chief executive Robert Benmosche, who took AIA public in Hong Kong in the world’s third-biggest IPO two years ago.
AIG was forced to sell parts of its massive business, including AIA, after the US government bailed the company out in 2008 as it teetered on the brink of collapse. The government spent $182 billion on the rescue.
AIG priced its 13.69% stake or 1.65 billion shares in Asia’s third-largest insurer at HK$30.30 per share. The deal had been marketed at HK$29.65-HK$30.65 apiece.
That is a discount of 4.3% to AIA’s close at HK$31.65 in Hong Kong on Friday. AIA shares fell 0.8% in early Tuesday trade, less than the discount, underscoring demand for the stock. Trade had been suspended on Monday at the company's request.
“There are plenty of candidates out there ready to buy into the stock,” said Ping Cheng, an insurance analyst at DBS Vickers in Shanghai.
“AIA offers very solid growth outlook and has a profitable profile. The expectation is that there is plenty of growth out there. They just did an acquisition in Thailand, they’re in the low penetration markets like Vietnam, Cambodia.”
Shares in AIA have soared about 61% since the $20.5-billion IPO in 2010,
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