Update | US insurance giant AIG offers stake in Chinese insurer PICC for sale; AIG under pressure to split 3 ways from Carl Icahn
AIG stake in PICC worth around US$1 billion, second time in 2015 it is selling PICC shares
American International Group (AIG) is selling a stake in PICC Property and Casualty Co Ltd worth up to US$1 billion to institutional investors through a block deal, cutting its shareholding in the Chinese state-owned insurer for the second time this year.
The US insurer acquired a stake in PICC Property and Casualty as a cornerstone investor in 2003, ahead of the Chinese insurer's flotation. The deal launched on Monday comes after AIG raised $500 million by selling down its PICC P&C stake in March.
The planned sale also comes as AIG faces pressure from billionaire activist investor Carl Icahn to split the company into three..
READ MORE: Chinese insurance firms face headwinds after record growth
AIG is offering between 355 million and 365 million PICC P&C shares in a range of HK$16.08-HK$16.38 each, a term sheet of the deal showed. The basic offer is worth about US$750 million, with a US$250 million up-size option taking the total deal value to $1 billion, the terms showed.
The price range represents a discount of 4.3-6.1 per cent to PICC Property's last traded price.
AIG traces its roots to 1919 when Cornelius Vander Starr established a general insurance business in Shanghai. Following the global financial crisis, AIG sold part of its Asian life insurance business AIA Group through a $20.1 billion Hong Kong initial public offering (IPO) in 2010 to help repay the U.S. government bailout. Over a period of time, AIG fully exited from AIA.
But in 2013, AIG invested about $500 million in People Insurance Group of China Co IPO, reaffirming its commitment to the Asia-Pacific region. Prior to Monday's sell-down, AIG held 1.2 billion PICC P&C shares, or about 26.4 per cent stake of the company, making it the Chinese insurer's biggest shareholder.
