The U.S. Treasury Department has begun an offering of $4.5 billion in American International Group Inc. (AIG) shares, and the bailed-out insurer plans to buy back as much as $3 billion of the stock.
Citigroup Inc. (C), Deutsche Bank AG (DBK), Goldman Sachs Group Inc. (GS) and JPMorgan Chase & Co. are managing the sale, and other banks are expected to be added, the Treasury said in a statement today.
A $4.5 billion sale would be the smallest of four offerings of AIG stock by the Treasury Department. The U.S. holding was cut to 61 percent from 92 percent in the first three sales, which raised more than $17 billion for the Treasury. AIG has raised funds for repurchases by divesting assets including part of its stake in Hong Kong-based insurer AIA Group Ltd.
“Ongoing asset sales and share buybacks are a near-term catalyst for AIG,” Jimmy Bhullar, an analyst at JPMorgan, wrote in a research note today before the announcement.
AIG advanced 1.6 percent to $31.34 at 4 p.m. in New York. The first two offerings were priced at $29 a share, and the third at $30.50. The government needs to average about $28.72 over all share sales to break even on its investment, which was part of a 2008 bailout.
Chief Executive Officer Robert Benmosche has been repurchasing stock to help the company regain independence and increase the value of remaining shares. Book value per share, a measure of assets minus liabilities, climbed to $60.58 as of June 30 from $57.68 on March 31, the company said yesterday when it posted its third-straight quarterly profit.
Buybacks contributed $1.03 to the increase in book value per share in the quarter, Chief Financial Officer David Herzog said on a conference call today.
Underwriters have a 30-day option to buy as much as $675 million more in AIG stock from the Treasury, according to the statement.
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