AIG to Sell Asset Management Unit for $500M

By | September 8, 2009

American International Group Inc agreed Saturday to sell a part of its asset management business to Hong Kong tycoon Richard Li’s Pacific Century Group for about $500 million, in the first major asset sale under the watch of its new chief executive.

AIG, which was rescued by the U.S. government with up to $180 billion in taxpayer funds, said it will get $300 million in cash at closing and a future consideration that includes a performance note and a continuing share of carried interest.

AIG Chief Executive Robert Benmosche told Reuters late last month that he did not favor a quick sale of company assets at any price, as the insurance giant tries to raise money to pay back some $80 billion it owes to the government.

Since taking over on Aug. 10, Benmosche has stopped the sale of the AIG’s broker dealer group and paused the auction of its aircraft leasing unit, International Lease Finance Corp.

He also said in the interview that he had not yet decided what to do with the asset management business. “I’m concerned about its value in the marketplace right now,” he said.

The deal with Pacific Century Group was done at a price that’s competitive with other recent comparable asset management transactions, a source briefed on the matter said, declining to be named because the information is not public.

The business was put on the block at the beginning of this year, but the auction process dragged on for months.

In June, a source said that Pacific Century Group was planning to join a consortium of Franklin Resources Inc and private equity firm Crestview Partners LP, which was in exclusive talks at the time to buy the unit.

But Franklin subsequently dropped out of the group, and Crestview, which came close to doing a deal last month, did not make it past the finish line either.

Bridge Partners LP, a company owned by the Hong Kong-based private investment firm will buy the unit.

The business being sold operates in 32 countries and manages about $88.7 billion of investments of institutional and retail clients across a variety of strategies, including private equity, hedge fund of funds, listed equities and fixed income.

AIG Investments Chief Executive Win Neuger will head the new entity.

AIG is retaining its in-house investment operation that oversees about $480 billion of assets under management.

UBS acted as financial advisor to AIG and Perella Weinberg Partners advised Pacific Century Group. Debevoise & Plimpton LLP served as legal advisor to AIG. (Reporting by Paritosh Bansal, editing by Jackie Frank and Vicki Allen)

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