AIA IPO eyes up to $14.9bn fundraising

City A.M. Reporter
American International Group (AIG) plans to raise up to $14.9bn (£9.4bn) through an IPO of its Asian life insurance unit AIA Group, according to documents relating to the matter yesterday.

The Hong Kong-based company plans to raise between $13.9bn and $14.9bn by selling 5.86bn shares at HK$18.38 to HK$19.68 each, the document said. Including an overallotment option, the IPO could raise up to $17.1bn.

The document also revealed a list of cornerstone investors in the offering, including a $1bn commitment from the Kuwait Investment Authority and firms controlled by Hong Kong tycoon Cheng Yu-tung.

Citigroup, Deutsche Bank, Goldman Sachs and Morgan Stanley are joint global coordinators for the IPO. Though the total amount has yet to be determined, the standard Hong Kong IPO fee would have the banks involved splitting roughly $500m in fees.

In addition to a boon to the banks involved, it would also allow AIG to pay back the US government for its rescue in late 2008.

In total, six cornerstone investors had agreed to commit $1.9bn to the IPO, said the document which was provided by a person directly involved in the deal, who was not authorised to be identified because the information is not public.

AIG plans to sell 48.6 per cent of. Malaysian conglomerate Guoco Group which has agreed to invest $370m, while Lorita Investment and Kumpulan Wang Persaraan signed up to invest $200m each, the document said. Cheng’s New World and Chow Tai Fook committed $50m each.

AIA’s overall value after listing would be on par with what British insurer Prudential last offered for AIA in its failed takeover bid earlier this year.

AIA’s IPO was set to start today, with shares expected to start trading on 29 October. The issue was likely to be among the world’s largest ever and follows the record-breaking July deal from the Agricultural Bank of China. AIA would be the second largest IPO in the world this year.

“Considering that some of the Chinese insurers are trading more than two times embedded value, I think AIA can get overall value north of $30bn,” said Sally Yim, vice president at Moody’s Investors Service.