Posted on 21 Jul 2010
AIA has begun talks with potential strategic investors as the Asian life assurer seeks backers to ensure it can gain independence from its US parent AIG by listing more than half its equity on the Hong Kong market.
Mark Tucker, whose appointment as executive chairman and chief executive of AIA was confirmed on Monday, is in the region talking to regulators and potential investors from Singapore, Hong Kong and China.
Before agreeing to join AIA, Mr Tucker asked AIG for assurances that the Asian business could pursue independence immediately, according to people familiar with the matter.
AIA is aiming to raise more than $5bn (£3.3bn) from strategic investors and $12bn-$15bn from an initial public offering by November, according to people close to the situation. This would value AIA at more than $34bn and make it the only listed pan-Asian insurer.
Mr. Tucker, who has strong connections in the region from his time running the Asian operations of the UK’s Prudential and later as its chief executive, was hired for his experience and contacts.
Robert Benmosche, AIG chief executive, said in the statement on Monday: “[He] has the public company experience, record, relationships, judgment and leadership qualities that will help us accomplish our ambitious goals.”
The presence of strategic investors in AIA would help provide a foundation for the IPO in more challenging markets, bankers said. The recent public offering for Agricultural Bank of China, the world’s biggest IPO, and a cooling Chinese economy, have weighed heavily on regional stocks.
Several large Asian funds are known to be interested in taking stakes in AIA. Temasek, the Singaporean sovereign wealth fund, has long coveted AIA, while the Government of Singapore Investment Corporation was signed up for a $5bn chunk of the mammoth $21bn rights issue that the UK’s Prudential was set to make as part of its aborted bid for AIA this year. Mr Tucker also has good links with Ping An, the huge Chinese insurer.
A valuation of at least $34bn for AIA would be below the $35.5bn the Pru initially offered for AIA. However, it would exceed the UK insurer’s revised $30.3bn bid after it became clear that its UK shareholders would not support the original deal.
Shares in the Pru slipped 9p to 513p on Monday in spite of analysts suggesting that AIA under Mr Tucker might turn the tables and bid for the Pru. Other analysts said Mr. Tucker may be more likely to poach agents and business away from the Pru.
AIG, whose shares were also slightly lower at $35.43, would not comment beyond its statement that it would proceed with an initial public offering of AIA “as soon as practicable”.