Sources Report AIG Secures Approval to List AIA on Hong Kong Exchange

By Clare Jim, and | September 21, 2010

American International Group Inc inched closer in its ambitious plan to list its Asian life insurance business, AIA Group Ltd, after securing approval from the Hong Kong stock exchange, sources with direct knowledge of the matter told Reuters Tuesday.

AIA’s IPO could raise about $15 billion through an initial public offering (IPO) on the Hong Kong stock exchange, which would make it the biggest-ever insurance IPO and a record offering in Hong Kong.

The widely expected decision is an important step in bailed-out U.S. insurer AIG’s attempt to return the aid it received during the financial crisis. AIG, which is nearly 80 percent owned by the U.S. government, is disposing of assets to repay taxpayers who committed $182.3 billion to prop up the insurer during the crisis.

The Hong Kong stock exchange’s listing committee met earlier Tuesday to consider AIG’s application and approved it, sources said.

The sources were not authorized to talk about the matter publicly. An AIA spokesman was not available for comment.

AIA’s management team is in advanced talks with several Middle Eastern and Asian sovereign funds to sell cornerstone stakes in AIA, which is the next major step in AIA’s listing process.

The cornerstone investors have a lock-in period of six to 12 months on their investments. Cornerstone investors are a source of comfort to institutional and retail investors.

The success of AIA’s IPO will hinge largely on demand from cornerstone investors, as was seen in the record-breaking IPO of Agricultural Bank of China Ltd in July.

AIA plans to kick off pre-marketing of the IPO on Sept. 27, and start road shows on Oct. 6, with pricing slated for Oct. 21, two sources close to the deal said.

AIA aims to start trading on Oct. 29.

AIA’s IPO comes after AIG tried unsuccessfully to sell the business earlier this year to Britain’s Prudential Plc for $35.5 billion. The British insurer had asked AIG to cut the price to $30.4 billion, but it was turned down, leading to the termination of the agreement.

AIG has yet to decide how big a stake it wants to retain in AIA after the IPO, though bankers said it was clear that AIG wants to sell as much as possible. AIG was likely to sell a stake of close to 50 percent in AIA, sources close to the deal said.

At the top end of the indicative price range, AIA’s IPO could be valued at about $30.4 billion, which was the last offer that AIG received from Prudential, sources added.

Citigroup Inc, Deutsche Bank AG, Goldman Sachs Group Inc and Morgan Stanley are joint global coordinators for the IPO. Other bankers including Bank of America Merrill Lynch, Barclays, Credit Suisse, JP Morgan, UBS, ICBC International and CIMB, are also handling the IPO.

(Reporting by Clare Jim, Kennix Chim and Denny Thomas; editing by Gerald E. McCormick and Matthew Lewis)

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