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AIG Hires Record Total of Bookrunners for AIA IPO

Source: WSJ

Posted on 02 Sep 2010

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American International Group Inc.'s application to list its main pan-Asian life insurer contained a record 11 bookrunners, people familiar with the matter said, a further sign that the company is determined to raise as much money as possible from the IPO to repay U.S. taxpayers.

The New York-headquartered firm lodged the application to list AIA Group Ltd. with the Hong Kong stock exchange as expected on Thursday, the first formal step in a process culminating with an initial public offering around October.

The filing included the roster of banks it has chosen to help sell AIA stock. AIG has added Barclays Capital, the investment banking arm of Barclays PLC, J.P. Morgan Chase & Co. and Malaysian financial services firm CIMB Group to the list already known.

The other banks named on the application are: Citigroup Inc., Goldman Sachs Group Inc., Morgan Stanley, Deutsche Bank AG, Bank of America Corp.'s Bank of America Merrill Lynch, Credit Suisse Group, UBS AG, and Chinese bank ICBC International Holdings Ltd.

This is a record number of bookrunners according to data provider Dealogic, above the 10 mandated to sell shares in Taiwan's Megaforce Co. in 2007 or the 10 on the recent Agricultural Bank of China Ltd.'s US$22.1 billion IPO, the world's largest by value.

AIG's may be hoping that its long-list could help it root out buyers even if markets turn sour this fall, weighed down by weak U.S. economic data and fears of a double-dip recession.

The filing also contained a valuation range for AIA, which people familiar with the matter said was very wide and only so that the bourse can assess potential listing fees. AIG, majority-owned by the U.S. government after being rescued in 2008, hopes to raise about US$15 billion from the IPO, people have said, to go toward repaying the Federal Reserve Bank of New York, which holds $15 billion preferred equity in AIA and is owed another $21 billion under a credit facility it provided to AIG.

Only after the New York Fed is repaid can AIG start to plan for the government's exit.

AIG missed out on raising an additional US$5 billion to US$8 billion from AIA in pre-IPO placements partly because of its rigorous timetable, people have said, which it is expected to raise in follow-on offerings.

Once a company submits the so-called A1 filing to the Hong Kong stock exchange, the bourse holds a hearing in the following weeks to approve the listing. The company then begins pre-marketing and a roadshow if the listing is approved.