2nd UPDATE:AIG Seeking To Sell Global Asset Management Arm-Sources
February 03 2009 - 5:43AM
Dow Jones News
American International Group Inc. (AIG) is seeking to sell its
unit AIG Investments, in a bid to help repay U.S. government loans,
two people familiar with the situation said Tuesday.
The global asset-management unit could be sold for as much as
US$2.1 billion, analysts said, a fraction of government loans that
could total as much as US$60 billion.
The ailing American life insurer, which posted a third-quarter
net loss of US$24.47 billion, has received a government rescue
package that totals US$150 billion.
AIG is seeking to shed assets that doesn't fit with its strategy
of focusing on "worldwide property casualty with a continuing
interest in Asian life business."
Apart from AIG Investments, it is also trying to sell its stakes
in several Asian life insurance joint ventures and a 49% stake in
its Asian life insurance arm outside Japan, known as American
International Assurance Co., to repay the U.S. government loans as
soon as possible. Bankers valued the entire AIA business at more
than US$20 billion.
"But AIG's stance has definitely softened," said one person. "It
is more open to the idea of selling more than 49%."
The two people said Swiss investment bank UBS AG (UBS) has been
mandated to handle the sale of AIG Investments.
AIG Investments manages US$210 billion in assets, said one
person who had seen the invitation for bids. That amount is
substantially lower than the US$676 billion as of end-September
last year that AIG earlier reported.
The deadline for bids was originally Feb. 5, but it has been
pushed back to Feb. 12 so that potential buyers can look at the
company's full-year results, the person said.
Another person said the insurer is also talking to Asian
buyers.
Analysts valued the deal at US$1.1 billion to US$2.1
billion.
"The going rate for asset management companies is about 0.5% to
1% of their Assets Under Management," said one analyst, who
declined to be named. "But it also depends on the mix of assets.
The price will be lower if it has a higher proportion of fixed
income assets."
In Fortis (NL) N.V.'s (FORSY) failed plan to sell half of its
asset management unit to Chinese life insurer Ping An Insurance
(Group) Co. of China Ltd. (2318.HK) in March 2008, the asset
management company was valued at 2% of its AUM.
But valuations for the sale of asset management companies have
since fallen in tandem with their performance, which has weakened
due to investor redemptions and volatile markets.
AIG Investments provides services in asset management, with
capabilities in equity, fixed income, hedge funds-of-funds, and
private equity.
The company laid off around 6% of its workforce in December,
including its head of European Alternative Investments, Ion
Bogdaneris.
The company had about 1,950 employees worldwide before the
layoffs, AIG Investments said.
-By Amy Or, Dow Jones Newswires; 852-2832-2335;
amy.or@dowjones.com
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