Kuwait commits $1 billion to AIA IPO
Hong Kong, October 4, 2010
American International Group has received a $1 billion commitment from Kuwait Investment Authority (KIA) for AIA Group's Hong Kong initial public offering, a source familiar with the matter said on Monday.
KIA, the country's sovereign wealth fund, is among the major global institutions that have signed up as cornerstone investors ahead of AIA's about $15 billion IPO. The source would not disclose other investors.
AIA's planned listing comes after a takeover attempt by British insurer Prudential collapsed over price disagreements. The key question for AIG is whether the public markets will give it the $35.5 billion valuation offered by Prudential, which many argue included a control premium.Prudential later dropped the offer to $30.4 billion just before the bid failed.
An AIA spokeswoman declined to comment and KIA could not be immeditaely reached.
AIA will be the world's second-largest IPO this year after Agricultural Bank of China, which raised $21.9 billion in Hong Kong and Shanghai in July.
AIA has yet to decide the exact stake it will sell in AIA, but bankers have said the U.S. insurer is expected to offer around half of the company to the public market.
AIG, nearly 80 per cent owned by the US government, is disposing of assets to repay taxpayers who committed $182.3 billion to prop up the insurer during the financial crisis.
Cornerstone investors agree to buy into an IPO before it prices. They are barred from selling their shares for six-month lock-up period, helping build confidence in the offer before it goes to institutional investors.
AIG will hold at least a 30 per cent stake in its AIA for a year after AIA listing in October, the IPO term sheet showed earlier. – Reuters