In jumbo deal, AIG sells stake in AIA for $6.5 bn

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SummaryAmerican International Group Inc raised $6.45 billion from the sale of its remaining stake in AIA Group in Asia’s second-largest block sale ever, exiting a business the US insurer started nearly 100 years ago.

American International Group Inc raised $6.45 billion from the sale of its remaining stake in AIA Group in Asia’s second-largest block sale ever, exiting a business the US insurer started nearly 100 years ago.

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, and have become a top choice of fund managers looking to benefit from growing wealth in Asia and booming demand for insurance and other financial products.

The block offering, surpassed only by Vodafone Plc’s $6.6-billion stake sale in China Mobile two years ago, comes one week after a lockup on the shares expired, adding to two other rounds of AIA share sales in September and March that had raised about $8 billion in total. “The short time-frame in which (the placing) was completed demonstrates the strength of investor support for AIA and its growth prospects,” AIA’s chief executive Mark Tucker said

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