AIG and the government held a “bake off” in New York last Thursday, hosting chief executives and bankers from 10 of the world’s largest firms to pitch for the right to manage the deal.
JPMorgan and Bank of America were two of the three joint lead arrangers on AIG’s $4.3bn (£2.7bn) bank credit lines, while Goldman and AIG have a long-standing relationship. The Deutsche Bank connection is less clear, although AIG is expected to pitch investors aggressively for a large, global shareholder base.
The winning banks are expected to split a fee that is less than the 75 basis points of the offering value the government paid last year for the initial public offering (IPO) of General Motors. Reports say the fee could be closer to 50 basis points.
That is significantly less than the usual fee for a secondary offering of this size, although the banks are expected to make up for the lost revenue with the prestige of managing a marquee deal and the chance at future AIG business.
AIG’s selection of banks to manage its share sale left out Citigroup and Morgan Stanley. Citigroup has been a restructuring adviser for AIG and was also one of the joint lead arrangers of a $4.3bn bank credit lines to the insurer. Morgan Stanley has advised the government since the insurer’s near collapse in September 2008.
But both banks are likely to be among the four to eight joint bookrunners to be brought in closer to the offering, a source said yesterday.