March 23, 2023

DealBook: A.I.G. to Sell $2 Billion Stake in Asia Unit for Share Buyback

The headquarters of A.I.A. Group, American International Group's Asian insurance unit, in Hong Kong.Jerome Favre/Bloomberg NewsThe headquarters of A.I.A. Group, American International Group’s Asian insurance unit, in Hong Kong.

The insurance giant American International Group said on Thursday that it planned to sell a $2 billion stake in its Asian insurance unit as part of a plan to repurchase $5 billion worth of its own stock from the United States government.

The move is the latest effort by A.I.G. to shed assets and repay the government after the firm received a $182 billion bailout in 2008.

A.I.G. has been progressively selling its stake in its Asian insurance business, the A.I.A. Group, since listing the company on the Hong Kong Stock Exchange in an initial public offering that raised $17.8 billion.

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Under the terms of the deal announced, A.I.G. will offer investors 600 million shares in A.I.A. at 25.75 Hong Kong dollars to 26.75 Hong Kong dollars, according to the term sheet obtained by DealBook.

On the low end, the price represents a 2.1 percent discount to A.I.A.’s closing price in Hong Kong on Thursday; on the high end, it represents a 1.7 percent premium. The deal will leave A.I.G. with a stake of about 13 percent stake in A.I.A.

Robert H. Benmosche, chief of the American International Group, at a House panel in 2010 on the government's $182 billion bailout.Yuri Gripas/ReutersRobert H. Benmosche, chief of the American International Group, at a House panel in 2010 on the government’s $182 billion bailout.

Earlier this year, A.I.G. sold a $6 billion stake in A.I.A., which is the region’s third-largest insurer.

A.I.G. said on Thursday that it planned to buy as much as $5 billion of its own stock, the third repurchase of its shares this year. A.I.G. added that it would use the proceeds of the A.I.A. share sale, in part, to repurchase its shares.

The Treasury Department has been selling off its stake in A.I.G. Last month, officials said they would sell about $5 billion worth of A.I.G. stock to reduce the government’s holding to around 53 percent, from 92 percent when the firm was first bailed out.

The government’s links with A.I.G. now lie primarily with the Treasury Department’s shares in the insurer. The holdings could prove profitable. The stock is currently trading at almost $35, ahead of the government’s break-even price of $29.

Since receiving a government bailout, A.I.G. has recovered by reinventing itself as a smaller company that largely shies away from the types of complex investments that nearly led to its downfall.

Goldman Sachs and Deutsche Bank are managing the $2 billion share sale for A.I.G.

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DealBook: In Hong Kong, MGM I.P.O. Prices at High End

Pansy Ho, the chairwoman of MGM China, is the daughter of the gaming tycoon Stanley Ho.Ym Yik/European Pressphoto AgencyPansy Ho, the chairwoman of MGM China, is the daughter of the gaming tycoon Stanley Ho.

A joint venture between MGM Resorts International and the daughter of a Hong Kong casino mogul raised $1.5 billion on Friday in its initial public offering, highlighting the strong appetite for stocks that have a large exposure to China.

MGM China, whose main asset is a giant hotel and casino in the Chinese gambling hub of Macao, said in a statement Friday that it had priced its shares in the offering at 15.34 Hong Kong dollars ($1.97) — at the top of a previously announced price range.

With total proceeds of $1.5 billion, MGM China’s market debut in June will be one of the largest in Hong Kong so far this year.

It takes total issuance volumes on the city’s stock exchange since Jan. 1 to $18.9 billion — 215 percent more than the total raised during the same period last year, according to Dealogic — underscoring the rapid growth the Hong Kong stock exchange has enjoyed in recent years.

Hong Kong was the No. 1 market for I.P.O.’s in 2010: volumes last year topped $52 billion, according to Thomson Reuters, easily outperforming the New York Stock Exchange’s total of $35 billion.

Most of this activity has been Chinese companies listing in the city. However, Hong Kong is increasingly becoming a destination for non-Asian companies.

Among others rushing to list in the city in coming weeks are the suitcase maker Samsonite, which is owned by the private equity firm CVC Capital Partners. Samsonite is due to start its road show next week, according to a person with direct knowledge of the situation.

Prada, the Italian luxury fashion house, is also lining up a listing in June. Analysts have said the I.P.O. could raise about $2 billion. The road show for the listing is expected to kick off June 6, a person with knowledge of the planned transaction has said.

The people describing the Samsonite and Prada deals spoke on condition of anonymity because the details were not yet public.

And Resourcehouse, a mining company owned by the Australian billionaire Clive Palmer, said in a statement on Friday that it would issue the prospectus for its planned market debut in Hong Kong ‘‘on or around’’ Monday, with a trading start expected on June 10.

Shares in MGM China, meanwhile, are expected to start trading on the Hong Kong exchange on June 3, according to the company’s statement. Pansy Ho, daughter of the longtime casino mogul Stanley Ho, is lowering her existing 50 percent stake in the company as part of the transaction. The proceeds from the sale will make her one of the richest people in China.

Gambling revenues in Macao, a former Portuguese colony about an hour’s ferry ride from Hong Kong, have soared in recent years, and now dwarf those of Las Vegas.

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