American International Group Inc., the insurer majority owned by the U.S. government, sold a $500 million stake in Blackstone Group LP, according to a person familiar with the matter.
AIG, based in New York, exited the stake in a block trade before U.S. markets opened, said the person, who declined to be identified because he isn’t permitted to speak about the transaction. AIG notified Blackstone in 2010 that it would convert 35.7 million Blackstone partnership units into common shares, which trade on the New York Stock Exchange.
AIG has sold non-U.S. life insurers, a consumer lender, an asset manager and other businesses to help repay a 2008 U.S. government rescue that swelled to $182.3 billion. Chief Executive Officer Robert Benmosche, 67, is seeking to convince investors of the potential of remaining units, including global property-casualty insurer Chartis Inc. and domestic life insurance operations, as the U.S. Treasury Department works to exit its majority stake.
The sale removes a “major overhang” on Blackstone’s shares and makes way for “clearer sailing,” William Katz, a Citigroup Inc. analyst, said in a note to clients today. “We continue to see Blackstone as best positioned among publicly traded Alternatives Managers,” Katz wrote.
Christine Anderson, a spokeswoman for Blackstone, declined to comment on the transaction, citing legal restrictions. Mark Herr, a spokesman for AIG, also declined to comment. The CNBC cable network reported the sale earlier today.
The insurer previously sold 10 million Blackstone shares for $134.1 million, hours after they were converted from partnership units on Dec. 15, 2010, according to a Form 4 filed at the time with the U.S. Securities and Exchange Commission.
AIG’s investment in Blackstone dates to July 1998, when the insurer announced it would pay $150 million to acquire a 7 percent stake in the New York-based buyout firm, which was formed by Peter Peterson and Stephen Schwarzman in 1985 to provide merger advice. At the time, AIG also committed $1.2 billion to Blackstone buyout funds, the first of which was formed in 1987.
Blackstone fell 2.8 percent to close at $15.29 in New York trading. The stock has gained 9.1 percent this year, compared with an 8.9 percent increase in the Standard & Poor’s 500 Index.