atans1

18.6% of AIA for sale

In Insurance on 03/09/2012 at 7:08 am

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.

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  1. AIA began life in Shanghai,China,the red tycoons with very fat pocket must be in secret talk already.”Home Coming to China”I doubt GIC or THS can win,if interested.

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