American International Group Inc. (AIG), the insurer that repaid a U.S. bailout, raised HK$50 billion ($6.45 billion) from the sale of its remaining stake in AIA Group Ltd. (1299), pricing shares in the top half of the range. The Asian company’s shares dropped the most in almost five months.
AIG sold 1.65 billion shares at HK$30.30 each, AIA said in a statement today. The shares were offered at HK$29.65 to HK$30.65 each. AIA fell 3.3 percent to close at HK$30.60 in Hong Kong, the most since July 23. It was the biggest decliner and most actively traded stock by both volume and value in the city’s benchmark Hang Seng Index (HSI) with HK$56.6 billion ($7.3 billion) worth of shares changing hands today.
AIG Chief Executive Officer Robert Benmosche has sold more than $65 billion in assets, including AIA, Asian headquarters, and a U.S. consumer lender, to raise cash to help repay the U.S. bailout. He’s scaled back at AIG, once the world’s largest insurer, to focus on U.S. life insurance and global property- casualty coverage.
“This latest divestment of the remaining holding is noteworthy in AIA’s history since it marks the end of AIG’s shareholder interest in AIA,” AIA CEO Mark Tucker said in an e- mailed statement today, adding that AIG had provided “unwavering support” since its initial divestment.
The amount means the New York-based company has raised about $35 billion in four offerings of the Hong Kong-based life insurer. The sale is expected to complete on Dec. 20, according to the statement today.
AIA shares were sold at a 4.3 percent discount from the last traded price of HK$31.65 before the announcement. Today’s decline pared AIA’s share price gain this year to 26 percent this year, against the 25 percent gain of Hong Kong’s Hang Seng Finance Index tracking 12 banks, insurers and the city’s exchange operator.
Investors today kept AIA’s shares above the price of the AIG sale, when trading resumed after yesterday’s suspension pending the share sale. Almost 1.9 billion AIA shares were traded today, 15 percent of its outstanding shares.
“The main impact of the sale is that any ‘overhang’ left in the stock from AIG selling is now gone,” said Arjan van Veen, a Hong Kong-based analyst at Credit Suisse Group AG.
AIA’s free float will increase as a result of AIG’s exit, giving it slightly higher index weightings going forward, van Veen added.
AIG sold the majority of AIA in a 2010 initial public offering as the insurer raised cash to repay a U.S. bailout that swelled to as much as $182.3 billion. It divested another $8 billion in two earlier sales of AIA shares this year.
The U.S. ended its rescue of AIG by selling $7.6 billion of shares last week. The government owned as much as 92 percent of the insurer after taking over the firm to prevent its collapse in 2008.
AIA was among AIG’s “crown jewels,” according to Maurice “Hank” Greenberg, who built AIG into the world’s largest insurer during his four-decade leadership until 2005.
AIA traces its roots to 1919 when Cornelius Vander Starr, an American businessman, set up a fire and marine insurance agency in Shanghai. It was the first foreign-owned insurer to get a license in China, according to the company’s website.