Bailed-out American insurance giant AIG is expected to decide on the future of its Asian life business AIA this week, as scores of potential mainland bidders circle the US$35 billion company.
The Post revealed yesterday that four groups of Chinese investors were trying to buy AIA. But bankers close to AIG said a Hong Kong initial public offering of the pan-Asian insurance business could be more likely, as even mainland tycoons would struggle to fund such an immense transaction.
The American firm, which has been trying to divest its Asian life unit since late 2008 and has previously scrapped one attempt to float it in Hong Kong and two attempts to sell it, would decide what it wants to do with AIA at a board meeting in New York later today, Reuters said.
'There is no real M&A process going on right now. Most banks are not committing to advising potential bidders in case they are then conflicted from working on an IPO,' an investment banker close to AIG said. 'The reality is that hardly anyone in the world could raise the funds for such a large deal.'
AIG, which could not be reached for comment, needs cash to repay US$182.3 billion of rescue funds from US taxpayers. It first touted AIA around potential buyers in the insurance sector. Then, last February, it hired seven banks led by Morgan Stanley to float its pan-Asian unit on the Hong Kong exchange. AIG pulled that deal when British insurer Prudential made a US$35 billion offer for AIA in March. But a shareholder revolt forced Prudential chief executive Tidjane Thiam to cancel the buyout, in an embarrassing retreat which left the UK firm on the hook for at least US$450 million in deal fees.
The Post revealed yesterday that four mainland consortiums had approached AIG and the US Treasury with initial offers for the pan-Asian life business. One is led by Shan Weijian, chairman of buyout house Pacific Alliance Group. Another is headed by low-profile Chongqing tycoon Zhang Songqiao, chairman of Hong Kong-based CC Land Holdings. Guo Guangchang, chairman of Shanghai-based investment conglomerate Fosun Group, has also run the slide rule over AIA.