US insurance giant AIG offers stake in Chinese insurer PICC for sale; AIG under pressure to split 3 ways from Carl Icahn

AIG stake in PICC worth around US$1 billion, second time in 2015 it is selling PICC shares

PUBLISHED : Monday, 07 December, 2015, 11:34pm
UPDATED : Tuesday, 08 December, 2015, 3:01pm

American International Group (AIG) is selling a stake in PICC Property and Casualty Co Ltd worth up to US$1 billion to institutional investors through a block deal, cutting its shareholding in the Chinese state-owned insurer for the second time this year.

The US insurer acquired a stake in PICC Property and Casualty as a cornerstone investor in 2003, ahead of the Chinese insurer's flotation. The deal launched on Monday comes after AIG raised $500 million by selling down its PICC P&C stake in March.

The planned sale also comes as AIG faces pressure from billionaire activist investor Carl Icahn to split the company into three..

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AIG is offering between 355 million and 365 million PICC P&C shares in a range of HK$16.08-HK$16.38 each, a term sheet of the deal showed. The basic offer is worth about US$750 million, with a US$250 million up-size option taking the total deal value to $1 billion, the terms showed.

The price range represents a discount of 4.3-6.1 per cent to PICC Property's last traded price.

AIG traces its roots to 1919 when Cornelius Vander Starr established a general insurance business in Shanghai. Following the global financial crisis, AIG sold part of its Asian life insurance business AIA Group through a $20.1 billion Hong Kong initial public offering (IPO) in 2010 to help repay the U.S. government bailout. Over a period of time, AIG fully exited from AIA.

But in 2013, AIG invested about $500 million in People Insurance Group of China Co IPO, reaffirming its commitment to the Asia-Pacific region. Prior to Monday's sell-down, AIG held 1.2 billion PICC P&C shares, or about 26.4 per cent stake of the company, making it the Chinese insurer's biggest shareholder.

An AIG spokesman declined to comment.

Citigroup, Goldman Sachs and Morgan Stanley are managing the sale, the terms showed.