AIG auctions shares in HK AIA Group to repay bailout

Published:  6 Mar at 6 PM

As reported by the BBC, US insurance giant AIG, who was bailed out in 2008 by the US government, is auctioning off shares worth $6 billion of the Hong Kong-based AIA Group, in order to help repay its debt to the US government.

AIG is selling 1.7 billion shares for a price range of 27.15-27.50 HK dollars per share, say Bloomberg and Reuters. On Monday, shares of AIA, which is Asia's third-biggest insurer, were suspended.

In 2010, the AIG Group sold nearly two-thirds of its AIA shares in a preliminary public offering, in an effort to repay the bailout loan. AIG held 3.96 billion stakes, or a 33% in AIA Group as of 31 May, said Bloomberg.

Many analysts claimed the time was ripe to sell shares in AIA. Kenneth Yue at CCB International in Hong Kong said AIG was doing the sale at an opportune moment. Upon analysing the AIA Group’s new business growth from last year, values went up by 40%, he said.

The peak has already been reached, Yue said. It would be very challenging for AIG to keep driving its new business value forward by 40% each year, he added.

AIG announced the pricing for the shares would be revealed before 6 March. The company received $182 billion in bailout money by the US government during the 2008 financial crisis. This amount has already been partially repaid.