AIG sells China’s insurance firm to raise $1.25 billion


American International Group (AIG) has raised HK$9.68 billion ($1.25 billion) by selling a large chunk of its stake in China’s PICC Property and Casualty Co Ltd (PICC P&C) (2328.HK) in a block deal.

AIG sold about 740 million shares at HK$13.08 each, or near the bottom end of a marketing range, IFR said, citing sources close to the deal. Most of the shares were bought by institutional investors, it added.

With this, AIG has raised about $2.6 billion by selling PICC P&C shares since last year, after investing in the company ahead of its IPO in 2003.

AIG’s stake sale is among the biggest block deals in Asia this year and comes at a time when several European and U.S. financial institutions have been trimming their exposure to Chinese banks and insurers.

Citigroup and Deutsche Bank, both have sold their minority holdings in Chinese banks in recent months.

AIG had offered the shares in an indicative price range of HK$13.06-HK$13.35 each, an up to 8 percent discount to PICC’s Friday close, a term sheet of the deal showed on Saturday. After the latest sale, AIG will be left with some 110 million shares in PICC, according to Thomson Reuters data. AIG has agreed to a 60-day lock-up on those shares, the term sheet showed.

The U.S. insurer has been cutting exposure to PICC P&C, and last year it raised about $1.3 billion in two separate selldowns. AIG acquired a stake in PICC P&C as a cornerstone investor in 2003, ahead of the Chinese insurer’s stock market flotation.

AIG traces its roots to 1919 when Cornelius Vander Starr established a general insurance business in Shanghai. Following the global financial crisis, AIG sold part of its Asian life insurance business AIA Group Ltd (1299.HK) through a $20.1 billion Hong Kong IPO in 2010 to help repay a U.S. government bail-out. Over a period of time, AIG fully exited from AIA.
But in 2013, AIG invested about $500 million in the IPO of People Insurance Group of China Co Ltd (1339.HK), reaffirming its commitment to the Asia-Pacific region. Prior to Saturday’s selldown, AIG held 851 million PICC P&C shares, making it the biggest shareholder in PICC P&C.

Goldman Sachs and Morgan Stanley are the joint global coordinators for the deal, according to the term sheet.

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