AIG is expected this week to make a decision on the fate of its Asian life insurance business AIA. Four groups of Chinese investors have intentions of buying the US$35 billion company, reports the South China Morning Post.
However, bankers close to AIG revealed that an initial public offering in Hong Kong was more likely.
The bailed-out American firm AIG has been trying to sell off AIA since late 2008, and has abandoned an effort to float its Asian business in Hong Kong and two endeavors to sell it. AIG needs cash to pay back a rescue loan of USD182.3 billion from US taxpayers.
"There is no real M&A process going on right now. Most banks are not committing to advising potential bidders in case they are then conflicted from working on an IPO," said an investment banker close to AIG. "The reality is that hardly anyone in the world could raise the funds for such a large deal."
Last February, AIG hired Morgan Stanley to lead seven other banks in its planned listing of on the Hong Kong exchange. The deal fell through when the British insurer Prudential’s USD35 billion offer was blocked by a shareholder revolt, leaving the bidder with a hefty penalty of US$450 million in deal fees.
The Post revealed yesterday that the four mainland consortiums which had approached AIG and the US Treasury with offers for AIA included Pacific Alliance Group, the Hong Kong-based CCLand Holdings and Shanghai-based investment conglomerate Fosun Group.
Hong Kong-based investment bankers cited that China Life Insurance was a prospective buyer.
Joseph Tong Tang, the executive director of Sun Hung Kai Financial, predicted that AIA could raise between US$8 billion to US$16 billion on the Hong Kong Stock Exchange.