AIA, the Asian life insurance arm of American International Group Inc, raised $17.9 billion (£11.4bn) by pricing its Hong Kong IPO at the top of an indicated range, sources said, due to heavy demand for one of Asia's best known industry brands.
The pricing of the IPO, set to be the world's third biggest, puts an end to an AIG saga. Its bid to sell AIA started roughly two years ago and has included two auction attempts and two floatation efforts.
AIG will use the IPO proceeds to pay back part of the U.S. bail out it received during the 2008 financial crisis – a rescue package that ballooned to a whopping $182.3bn.
The IPO will value AIA at $30.5bn at the top end, with AIG holding a 41.6 per cent stake that will drop to 33 percent if the green-shoe option is exercised in full.
The offering by AIA, which operates in 15 markets in Asia, comes amid a boom in Asian IPOs, with offerings zipping through stock exchanges throughout the region.
"It's more or less fully valued after the shares were sold at the top end," said Francis Lun, general manager with Fulbright Securities. "Still one could expect a five per cent upside on debut."
AIA sold 5.86bn secondary shares at HK$19.68 each, sources with direct knowledge of the matter told Reuters.
The sources declined to be identified as AIG was yet to make the decision public. An AIA spokeswoman was not available for an immediate comment.
AIA also exercised the upsize option to sell an additional 1.17bn secondary shares, due to strong demand from investors, the sources said.
AIA's unique position as the only listed life insurer with a wide foot print in the rapidly growing Asia-Pacific region is a big draw for investors, fund managers said.
Unlike many other foreign insurers, AIA has 100 per cent ownership of its entities in China, Indonesia, Malaysia, Thailand and Vietnam. AIA has more than 300,000 agents in Asia.
"This is a cost effective way for IPO investors to ride China's growth," said Francis Gaskins, president of IPOdesktop.com in Marina del Rey, California.
Asian IPOs raised about $90bn in the first three quarters of 2010, according to Thomson Reuters data, more than double the combined total from the United States, Europe, the Middle East and Africa.
City A.M. Reporter