American International Group Inc., the insurer rescued by the U.S. government, agreed to sell a rail-car leasing unit to Perella Weinberg Partners LP, the two companies said today in a joint statement.
The deal values the business at about $600 million, said two people with knowledge of the matter, who spoke on the condition of anonymity. New York-based AIG and Perella Weinberg didn’t disclose terms in the statement.
AIG, the recipient of a $182.3 billion U.S. government rescue, has been shedding assets to raise cash and narrow its focus to selling commercial insurance around the world and life insurance in the U.S. Perella Weinberg already owns Infinity Transportation, which manages rail and trucking assets, through its asset-management division.
“We continue to see long-term value in rail,” said David Schiff, a Perella Weinberg partner, said in the statement. “Rail remains the most efficient mode of transportation and we expect to benefit from the positive industry dynamics going forward.”
AIG Rail Services Inc. will be renamed Flagship Rail Services LLC after the deal’s conclusion, and Eugene Henneberry will continue to run the business as chief executive officer, the companies said. The transaction will probably be completed by the end of the quarter.
AIG said in a February regulatory filing it agreed to sell the business, without specifying the buyer or terms. The unit is part of a division set up in 2004 by a group of equipment-finance executives who joined AIG from Aegon NV’s Transamerica unit, according to an AIG website. It manages 11,000 tank cars, hoppers, and other cars from its headquarters in Chicago. Competitors include GATX Corp. and units of General Electric Co. and CIT Group Inc.
Perella Weinberg, the investment bank founded in New York in 2006 by Joseph Perella and Peter Weinberg, has an asset-management division with $7.7 billion in capital commitments and managed assets, overseen by founding partner Tarek Abdel-Meguid. Schiff is portfolio manager of the $1 billion Asset-Based Value strategy.
AIG has disclosed divestitures valued at more than $50 billion, including interests in a power plant, a consumer lender, and insurers in Hong Kong and Japan. It repaid a credit line from the Federal Reserve Bank of New York in January. The U.S. Treasury Department plans to divest its 92 percent stake in AIG shares in public offerings as soon as this year.
The company’s shares fell 85 cents, or 2.5 percent, to $32.61 at 4:15 p.m. in New York Stock Exchange composite trading and have declined 32 percent this year.