THE US Treasury is considering whether to scale back plans for an initial public offering (IPO) of AIG due to the insurer’s poor share price performance in recent weeks.
AIG’s board met late yesterday evening to consider options, ahead of the firm’s annual shareholder meeting today.
The stakes are high for the US Treasury as it gears up to sell about $20bn (£12.2bn) of its stake in the firm. The US government owns 92 per cent of AIG after bailing it out multiple times during and after the financial crisis.
Selling shares at a loss would be a blow for the Treasury, but the government is under pressure to exit its crisis-era investments in private companies and raise as much money as it can before it runs up against borrowing limits.
One option for AIG and the Treasury could be to scale back the size of the offering, close to the government’s break-even point, reports have suggested. The move would give AIG breathing space to perform in the market, in order to build up appetite for a large sale later this year.
Shares in the company have fallen by more than 30 per cent between the 20 January and 9 May, putting doubt on the government’s sale plans.