AIG Jumps as AerCap Sale Seen Freeing Capital for Buybacks

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American International Group Inc. rose in New York trading on its plan for selling AerCap Holdings NV stock in a public offering, which will free up capital that could be used for share buybacks.

AIG climbed 2.2 percent to $59.95 at 2:34 p.m. The company plans to sell 50 million shares, or 51 percent of its AerCap stake, in the offering, the plane lessor said in a statement Monday. That’s valued at about $2.4 billion based on Schiphol, Netherlands-based AerCap’s most recent closing price.

AIG Chief Executive Officer Peter Hancock has been repurchasing his company’s stock and redeeming high-cost debt as he works to boost return on equity. The New York-based insurer said April 30 that it would buy back $3.5 billion in stock after first-quarter profit climbed 53 percent on gains at the unit selling property and casualty coverage to commercial clients.

“We view this as another step forward on the capital-management front,” Randy Binner, an analyst at FBR Capital Markets, said of AIG’s plan for AerCap in a note to clients.

AerCap advanced 4 percent to $50.16.

The decision by AIG to reduce its stake is “constructive towards building a more stable long-term investor base,” Helane Becker, an analyst at Cowen and Co., said in a note on AerCap. “Investors did not view AIG as a long-term shareholder.”

The insurer got the stake as part of its sale last year of International Lease Finance Corp. to AerCap. AIG was required to hold all the stock for at least nine months and can eventually exit the entire holding, under terms of the deal.

Citigroup Inc. and Goldman Sachs Group Inc. are leading the offering. AerCap also said it would repurchase $750 million of its stock from AIG at the offering price.