AIG Gets $500 Million Bids for Asset Management Business

By Paritosh Bansal
February 25, 2009

American International Group Inc.'s asset management business has attracted corporate and private equity buyers with initial bids coming in around $500 million, sources familiar with the matter said.

The asset management business being sold rests within AIG Investments, which had $111.5 billion in client assets under management overall as of Sept. 30.

AIG, which is trying to sell assets to pay back the U.S. government after a bailout, declined to comment.

AIG is trying to dispose of assets at a difficult time. Credit for deals remains difficult to come by due to the financial crisis and many would-be buyers are dealing with their own problems.

The company expects to post a fourth-quarter loss of about $60 billion, the biggest in corporate history, and is in talks with the government for further aid, discussing a number of options to deal with its financial issues.

AIG said Tuesday it will rethink its sales strategy if tough market conditions keep it from getting a good price for its properties.

Asset managers have historically sold in the range of eight to 12 times their earnings before interest, taxes, depreciation and amortization, said Michael Kim, an analyst at Sandler O'Neill.

The unit may be valued around the lower end of that range, one source said.

A chunk of the assets in the unit depend on AIG and potential buyers are looking for commitments from the insurer that those assets would stay with the unit after it changes hands, the source said.

The price that the unit fetches would depend on the commitments that AIG gives, the source said.

"The investor would have to know that the assets, when they buy it, don't disappear within a year," the source said.

AIG has said it plans to sell all assets except its U.S. property and casualty business, foreign general insurance and an ownership interest in some foreign life operations, as it looked to pay back the government after a bailout that swelled to about $150 billion.

AIG's shares closed down 12 cents, or 22.6 percent, at 41 cents on the New York Stock Exchange, down from its 52-week high of $52.25.

(Reporting by Paritosh Bansal, Megan Davies; editing by Leslie Gevirtz)