18.6% of AIA for sale

American International Group becomes free after September 4 to sell a US$7.6 bn stake in former unit AIA. If AIG does decide to sell the entire18.6% , the deal would be Asia’s biggest-ever block offering ever.

AIG could decide not to sell anything or it could sell off a small chunk. But expectations are that it wants to sell everything and soon.

AIG spun off two-thirds of AIA in 2010, raising US$20.5bn in the world’s third-largest IPO ever at the time. AIG agreed not to sell its remaining stake until this yr. In March it sold some, raising US$6bn.

AIA’s shares are up 9.5% so far in 2012  (the Hong Kong financial services sub-index finance/market is up 4.7% in 201)  and are up by 35% since its IPO. It is seen as a proxy to Asia’s growing wealth and booming demand for insurance and other financial products.

But AIA is not expensive compared to its peers. It trades at 16.3 times its 12-month forward earnings, according to Thomson Reuters data, while Asia-Pacific insurers on average trade at forward price-to-earnings ratio of 15.3.

AIA shares have remained resilient despite the stock overhang issue and just a week before the March selldown, the stock came within striking distance of its all-time high. AIG sold the AIA shares at HK$27.15 in the March selldown and on Friday the stock traded flat at HK$26.55.

As usual the underwriters are expected to line up a large investor or strategic buyer to take up a big chunk of the deal. GIC or Temasek? Temask is a cornerstone investor, I think.

Err Lee what did you say abt food inflation?

Last month when asked about the current drought in the United States Midwest which is affecting corn and soybean crops, Mr Lee Yi Shyan, Senior Minister of State for Trade and Industry and National Development and chairman of Retail Prices Working Group said it is not likely to have an impact here in the near term.

This is because Singapore imports a negligible amount corn, and only seven per cent of its soy beans from the US.

But a sustained price hike for the grains, which are used for animal feed, he said, may raise commodity prices in the long term. (More)

Funny then that on 30 August BBC Online reported

Global food prices have leapt by 10% in the month of July, raising fears of soaring prices …

The bank said that a US heatwave and drought in parts of Eastern Europe were partly to blame for the rising costs.

The price of key grains such as corn, wheat and soybean saw the most dramatic increases, described by the World Bank president as “historic”. http://www.bbc.co.uk/news/world-19431890

So the issue is not even that only in the long term food prices here will rise, but how soon. That it will rise in “the near term”, despite his denial, is a probability. Even before the spoke juz before National Day, prices had alread risen. I mean as a MTI minister, surely he would have access to that information, unless his officials hid data from him to make him look stupid?

Discounting that possibility or the possibility that MTI does not have access to near-live data (highly unlikely),  either this jnr minister doesn’t know economics (maybe taz why he did not get promoted to minister?*) or he was juz mindlessly spinning knowing that the constructive, nation-building media would not challenge him, and that people would believe him.

Methinks one test of whether the government is sincere about having a national conversation is for ministers to stop assuming that the people are simple-minded to believe whatever ministers say. Those days are over. S’poreans have the internet and social media to keep tabs on waz happening in the rest of the world and in S’pore. The days when the constructive, nation-building local media filtered everything are over.

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*Unlikely given Tharman’s and Hng Kiang’s grasp of basic economic theory 

http://atans1.wordpress.com/2012/05/25/will-hougang-make-the-pap-moan-the-inflation-blues-not-joke-abt-it/

http://atans1.wordpress.com/2012/05/08/tharman-has-a-point/

TOC: Nine “Main Stories”, only one original

I was planning to write a totful, analytical piece abt the changes at TOC since the GE of 2011. There had been major changes twice since then in the way TOC was run.

But the front page of TOC (at the time of writing compels) me to put up this short note.

There are nine Main Stories, of which only one is an original piece. Of the rest, two three are media releases (no, I’m not bitching abt them because they give useful info) but the remaining six five Main Stories are from other blogs. And the original article is not a gd piece of writing. It’s a rant.

And the reprints (two from the same person) are OK reads, nothing v.v good. Today’s Main Story, written by one KennethJ, is not even that recent. It was written shumetime back.

While today’s front page, is extreme, I’ve noticed that ever since Ravi the do-gooder stepped down*, there has been a growing use of “reprints”. In June, I sent an email to a member of the Core Team asking jokingly if KennethJ was paying for ad space or had taken over TOC**. On 2 June and 3 June this year, out of the nine Main Stories TOC carried, he had three articles (I’m not sure if they were reprints from his blog) and one praising him to the skies.***

Is TOC becoming an aggregator? Is it becoming an aggregator out of choice or because of a dearth of original material ?Remember it’s so easy nowadays to start a blog, and aggregators like SGDaily and S’pore Surf draw attention to new bloggers by helping promote pieces they think should be of interest.

And why is the editorial team not writing more themselves? Ravi and before him, Andrew Loh, used to write many of the original articles that appeared in TOC.

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*I helped him edit and the new team asked me twice to help edit but never used my edits (their right) and I never ever got another piece to edit from them (fair enough, not wasting the time of both sides if they don’t like my edits)

**Remember he tried to takeover SDP only to fail and look silly, dumb and petulant in the process. Chiam (his mentor) came out looking silly but recovered quickly his credibility. KennethJ never did.

***And between 7 July- 10th July, there were two articles by him (again not sure if they were reprints) and one abt him out of the nine Main Stories.

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Update on Citi: New Citi, old Citi

As GIC still has a loss position in Citi (though it has realised profits to offset the loss, unlike in UBS), tot I’d update readers

http://dealbook.nytimes.com/2012/08/22/the-new-citigroup-isnt-your-fathers-citicorp/?nl=business&emc=edit_dlbkam_20120823

Rot at SGX continues despite (or because of?) FT CEO & president

Not only are the two FTs unable to attract mega-IPOs, CIMB Research says the string of privatisations is likely to continue, helped by cash-rich buyers, highly-valued Asian consumer franchises and battered valuations for cyclical companies.

We have seen a few privatisation offers, the latest being Heineken for Asia Pacific Breweries and another from Thai energy firm PTT to buy out Sakari Resources.

CIMB said stocks that may receive privatisation offers include offshore marine firms CH Offshore and KS Energy, as well as property developers such as Bukit Sembawang and Ho Bee.

To identify privatisation situations, CIMB looked at stocks trading below 1 standard deviation from their historical trading ranges and shareholders with interest and means to de-list the companies.

“We believe that globally, corporates have been building up cash to prepare for the worst, ever since the global financial crisis. They have the means to make an offer.”

Related rant: http://atans1.wordpress.com/2012/08/28/rubbishing-msias-ipo-streak/