AIG selling AIA shares to pay US government

AMERICAN International Group (AIG) is selling more of its stake in Hong Kong-based AIA to raise $6bn (£3.8bn) and help the firm pay back its US government bailout.

The insurer is looking to place 1.7bn AIA shares in a range of HK$27.15-27.50 per share, a seven per cent discount to Friday’s price.

The shares will go to institutional investors and AIG will use the proceeds to reduce the balance owed to the US Treasury.

AIG was on the brink of collapse in September 2008 when the Treasury stepped in and initiated a $182bn bailout which left the federal government owning 77 per cent of company.

Since then it has initiated a series of sales aimed at paying back this debt, including floating two-thirds of AIA – once considered its crown jewel asset – for $20.5bn in 2010.

AIG retained a third of AIA after the IPO but this new share sale will see the US company reduce its interest to around 19 per cent.

Deutsche Bank and Goldman Sachs are understood to be co-ordinating the sale.

Shares in AIG have gained 46 per cent since early October and rose a further 2.05 per cent to $30.41 yesterday.