August 15, 2022

DealBook: A.I.G. Underwriters Price Stock Sale at $29

Underwriters for the American International Group have priced the insurer’s long-awaited stock sale at $29 a share, at the low end of an expected price range as the government begins selling its holdings in the company, people briefed on the matter told DealBook on Tuesday.

At that price, A.I.G. will raise at least $8.7 billion, with the bulk of the proceeds going to its biggest shareholder, the Treasury Department. The government sold 200 million shares as part of the 300-million-share offering, though it could end up selling more if underwriters exercise an overallotment option.

After the offering, the Treasury Department’s stake in the company will fall to about 77 percent from 92 percent. The stake was acquired in the government’s rescue of A.I.G. during the financial crisis of 2008.

But the price is barely above the Treasury Department’s break-even price of about $28.73, a level that the government was widely seen as holding firm on. While expectations for the offering were high — at one point, the so-called “re-I.P.O.” was speculated to fetch as much as $25 billion — A.I.G.’s stock price has slid this year amid blows to insurers, like claims from the Japanese earthquake.

The Treasury Department and A.I.G. ultimately decided to lower the size of the offering to maximize the price they could fetch, these people said. The government is hoping to reap bigger profits from subsequent share sales, so long as the company’s stock price improves over time.

A.I.G.’s board was meeting on Tuesday afternoon to approve the price, these people said.

Still, the government’s sale of a big portion of its holdings was seen as vital to rehabilitating A.I.G. after its near-failure in 2008. Under its chief executive, Robert H. Benmosche, the company has sought to re-establish itself as a private company free from government ownership.

It has already sold off a wide array of businesses to help pay off the Treasury Department and the Federal Reserve Bank of New York, and late last year sold $2 billion in new debt.

Leading the A.I.G. stock sale were Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs and JPMorgan Chase.

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