A theory was gaining ground on Wednesday that, having utterly failed in any way to deal with Britain’s cartwheeling banks ahead of the crisis, the FSA, Britain’s alleged financial regulator, has now set its sights on wrecking the healthy side of Britain’s financial sector.
The Prudential has been fined £30m, and its strikingly successful chief executive, Tidjane Thiam, has been censured, seemingly for worrying that someone at the FSA might possibly leak news of the Pru’s ultimately bungled takeover bid for AIA three years ago. Read more
American International Group is planning to sell about half its stake in pan-Asian life insurer AIA Group, the WSJ says, citing people familiar with the matter. A one year lockup period ends this week allowing AIG to sell about $6bn worth of AIA shares. AIG sold two-thirds of its stake in AIA’s IPO in October, and now plans to sell down its stake in the coming weeks, depending on market conditions, the report says.
Mark Wilson, former chief executive of AIA, the pan-Asian life assurer, is trying to raise private equity backing for a bid for the non-core emerging markets businesses of Aviva, according to people familiar with his plans. The FT says Mr Wilson, who left AIA a year ago after the collapse of its proposed sale byAIG to Prudential, is thought to be only at the initial stages of his fundraising efforts and one person with knowledge of his plans said there were still a number of other opportunities he could pursue. Aviva, which sold its RAC roadside rescue business to Carlyle for £1bn ($1.6bn) in June, is looking at potential sales of its smaller eastern European and Asian businesses as it refocuses on 12 core markets.
An investigation is under way into the handling of Prudential’s $35bn aborted bid for Asian life assurer AIA, according to people familiar with the matter. The London-based insurer was ordered by the UK financial watchdog to commission law firm Clifford Chance to conduct an inquiry because of concerns about the management of the AIA deal, the people added. The external “skilled persons report” is focusing in particular on the Pru’s investment bank advisers, Credit Suisse, JPMorgan and HSBC, and whether they discharged their duties properly, writes the FT.
AIG will get up to $22 billion more in TARP funds, allowing it to pay off the Federal Reserve in full and for taxpayers to begin profiting from the firm’s bailout, Reuters reports. The Treasury department said on Monday that it expected the US government to earn a profit on its bailout to AIG. When the restructuring of the insurance giant is completed, which is expected by the end of the first quarter of 2011, the Treasury will own 92.1 per cent of AIG’s common stock. Meanwhile the FT reports that AIG has raised almost $37bn by selling its Alico life insurance subsidiary and floating its AIA unit in Asia. Robert Benmosche, chief executive, celebrated a “major milestone in our commitment to repay the American taxpayers”. AIG said it would use the proceeds to repay a credit facility held with the Federal Reserve Bank of New York.
Shares in American International Group’s former Asian unit have surged 17 per cent on their first day of trading in Hong Kong, Reuters reports. AIA now bears a market value above $35.5bn, the initial offer made for it earlier in the year by UK insurer Prudential, in a deal that eventually collapsed. The robust debut will come as a boost for AIG, which remains AIA’s biggest shareholder, as it seeks to repay the government following its bailout during the financial crisis, the FT says. The ease with which AIA has completed Hong Kong’s biggest share sale – surpassing the mega-listings of Agricultural Bank of China earlier this year and ICBC in 2006 – highlights the strength of investor demand for Asian equities, the paper adds.
American International Group has disclosed that its chief executive Robert Benmosche has cancer and is undergoing aggressive chemotherapy after an unclear prognosis, Reuters reports. The news is a blow to the insurer, just as it makes progress on paying back taxpayers for its 2008 bailout, including the recent sell-off of its Asian unit AIA. Four chief executives have served at AIG since mid-2008. AIG’s board is still in the early stages of succession planning, says the FT, which notes that more than $35bn of Asian assets are still to be sold or listed on AIG’s way to ending government control.
AIA, the Asian life insurance unit of AIG, has raised $17.85bn in the largest initial public offering ever completed in Hong Kong, sources have told the FT. The deal values AIA at $30.5bn, which will make the company the world’s seventh biggest insurer by market cap. The deal is a milestone for AIG’s efforts to pay off its taxpayer bailout too. Having already allotted extra shares on top of its original plan, AIA is in a position to offer even more after shares start trading, which may take the amount raised to over $20bn, according to the WSJ.
AIA, the Asian life insurance unit of US insurer AIG, has raised $17.85bn in the largest IPO ever completed in Hong Kong, said people familiar with the matter. AIA shares were priced at the top of an indicated range from HK$18.38 to HK$19.68 late in New York on Thursday. The deal values AIA at $30.5bn, making the company the world’s seventh biggest insurer by market cap and underscoring investor demand for Hong Kong IPOs. The sale is also a big step in AIG’s efforts to repay its $60bn-plus bailout aid and free itself from government ownership. A large part of the deal’s proceedings will go to the US authorities, which bailed out AIG in September 2008.
China Investment Corp and Ping An are among the big institutional investors from the mainland who are pursuing substantial stakes in AIA, the Asian businesses of AIG, in this month’s share sale of up to $20bn, according to people working on the deal, reports the FT. China Life, the world’s biggest life assurer by assets, and Taikang, another Chinese life company, are also lining up for stakes in the initial public offering along with most other significant regional life insurers, including the Asian arm of Prudential of the UK, according to one person involved. The interest of mainland investors like CIC, which wants a stake of about $250m, according to a person close to the issue, shows how Chinese investors have come full circle after shunning the company initially. Meanwhile Bloomberg reports that because of the time required to allocate stock from the offering, the group will stop taking orders from institutional investors two days earlier than planned.
AIA will address questions about its growth by increasing profitability and expanding organically rather than by pursuing acquisitions, according to Mark Tucker, chief executive of the $30bn Asian life assurer about to list in Hong Kong, the FT reports. Tucker told the Financial Times that AIA, which is being sold by cash-strapped US parent AIG, would always look at “tactical” deals, but that its core focus was on organic growth via new business and expanding its agency networks. “The size of the opportunities, the scale of the opportunities that we have across markets, products, cost base are so significant – that will be the main focus for us,” Tucker said. Tucker added he did not intend to poach large teams away from rivals. Meanwhile, banks are set to earn up to $355m for underwriting the deal, Reuters reports.
AIG could raise the size of the initial public offering of its Asian business to as much as $20.5bn if demand proves strong, the FT says, reporting that the deal has been structured to give it the flexibility to expand the Hong Kong share sale above and beyond the usual overallotment option. Sources added that AIG may end up selling two-thirds of AIA in the end. Thanks to a rare ‘upsize’ option, the deal size could range from $13.9bn to $20.5bn depending on demand, and investors could end up with 49 per cent of the company or as much as 66 per cent. But, Lex notes, the catch is that deals of this size – likely to be Hong Kong’s second biggest, after the 2006 debut of ICBC – are about politics as much as economics, and strategic investor interest will be closely watched.
AIG plans to raise as much as $17.1bn from the Hong Kong initial public offering of AIA, its Asian business, the FT reports,citing people close to the matter. The US insurer plans to sell about half of AIA in the IPO – valuing AIA at $28.5bn to $30.5bn, much lower than the original target of $35bn-plus. AIG has hired 11 bookrunners, with Citigroup, Deutsche Bank, Goldman Sachs and Morgan Stanley leading the deal as joint global co-ordinators. Bloomberg cites Goldman Sachs and Merrill Lynch notes suggesting that AIA’s embedded value may grow to $25.8bn next year. The stock is set to start trading on Oct 29.
AIG plans to raise as much as $17.1bn from the Hong Kong initial public offering of its prized Asian business, according to people familiar with the matter, the FT reports. The US insurer, which is seeking to repay the US government following its $182bn bail-out during the financial crisis, plans to sell roughly half of AIA in the IPO. The deal would value AIA at between $28.5bn and $30.5bn – much lower than the $35bn-plus valuation than AIG had originally hoped to achieve. The top end of the valuation range is about equal to the $30.4bn in cash that Prudential of the UK offered for AIA this summer – a bid that was rejected by AIG.
US insurer AIG will keep a minimum stake of 30% in AIA for at least a year after its Asian businesses are listed in Hong Kong next month and will also be unable to sell any shares for six months after the listing, reports the FT. The six-month lock-up will also apply to AIA itself and to the so-called cornerstone investors – who agree to take large stakes in exchange for a guarantee they will get that amount – with whom the Asian company hopes to finalise deals this week.
AIA, the Asian arm of US insurer AIG, has set Oct 29 for its planned $15bn-plus listing on the Hong Kong Stock Exchange, reports the FT. AIA is expected to set a price range for its IPO early next week and hopes to strike agreements with cornerstone investors, who could take one-fifth of the shares sold, a few days after that, said people close to the matter. AIA’s move follows the collapse of its planned $35.5bn sale to UK insurer Prudential this summer. The WSJ notes that AIA’s planned debut highlights a boom in Hong Kong IPOs.
The finance chief of AIA who quit the pan-Asia life insurer when it was to be sold to the UK’s Prudential, plans to launch a Hong-Kong-based reinsurer that would seek to raise $500m-$1bn of capital, reports the FT. Steve Roder’s new company would be unusual in an industry dominated by a handful of large European groups, the Lloyd’s of London insurance market and Bermudian companies. Roder plans to take the same finance chief role in the as-yet-unnamed firm, while Franz Josef Hahn, who ran Swiss Re’s China business for a decade, is set to be chief executive.
A potential bid for UK life assurer Prudential from Chinese investors faces multiple obstacles, and would proceed only if an IPO from Asian rival AIA proves too expensive, say bankers and analysts, reports Reuters. Prudential shares jumped nearly 5% on Monday after the Sunday Times reported that big Chinese investors who backed Pru’s abortive bid for AIA earlier this year were in “early stages” of considering an offer for the insurer. The investors, who include Go Guangchang, chairman of China’s Fosun International, and Fred Hu, former chairman of Goldman Sachs in China, would keep only Prudential’s flagship Asian division, the paper said. FT Alphaville notes various reasons to be sceptical of a Pru break-up.
Prudential was trading top of the FTSE gainers board on Monday on news a group of Chinese investors were considering a break-up bid for the UK insurer. According to the Sunday Times, the billionaire entrepreneurs were among the Asian backers who wanted to throw their weight behind Prudential’s failed $35bn takeover bid for its Asian rival AIA earlier this year. But, according to FT Alphaville, there are a number of reasons to be sceptical about the idea of a Pru break-up — among them the cash-flow dynamics. Read more
A group of Chinese investors are considering a takeover offer for UK insurer Prudential, reports Reuters, citing The Sunday Times. The billionaire investors had backed Prudential’s failed $35bn bid for AIA, the Asian arm of US insurer AIG and later held talks on taking a strategic stake in AIA, the newspaper said without citing sources. They could still take a stake in AIA, which is planning to float in Hong Kong, and are also examining options including a move for Prudential’s Asian business. Guo Guangchang, chairman of Fosun Group, Fred Hu, former China chairman of Goldman Sachs and Shan Weijian, chairman and CEO of Pacific Alliance Group, were said to have been involved in the discussions, the report said.
AIA has struck a distribution deal with Industrial and Commercial Bank of China, the country’s biggest lender by market value, as the Asian arm of AIG moves to consolidate its position as the leading foreign life assurer in China, reports the FT. The bancassurance agreement, which was signed this week and could be announced as soon as Friday, comes as AIA is pressing on swiftly with plans to float on the Hong Kong stock exchange by the end of November. It’s a rare spot of good news for foreign insurers looking to break into Asia — AXA’s bid to gain total control of its Asian business is stuck in limbo, says the WSJ.
AIA has struck a distribution deal with Industrial and Commercial Bank of China, China’s biggest bank, as the Asian arm of US insurer AIG moves to consolidate its position as the top foreign life assurer in China, reports the FT. The bancassurance agreement, which could be announced as soon as Friday, comes as AIA proceeds with plans to float on the Hong Kong stock exchange by end-November. ICBC International, the bank’s securities arm, is one of two Asian banks among the 11 bookrunners on the AIA IPO, which could raise up to $20bn in one of the world’s biggest listings.
Martin Sullivan, who was ousted as AIG chief executive just three months before the world’s largest insurer was rescued by the US government, has returned to the industry with a leading executive role at Willis Group, the FT reports. Mr Sullivan is joining Willis, one of the world’s three biggest brokers, to lead a new unit designed both to win more large and complex multinational clients for the insurance broker and to sell more services to those it already has. AIG has meanwhile dropped plans to tempt strategic investors into its initial public offering of AIA in Hong Kong, as it rushes to complete its sell-off, the FT adds.
AIG will apply to Hong Kong regulators to list its Asian life insurance unit on September 21 with the aim to raise $15bn, sources familiar with the matter have told Reuters. The insurer has already appointed no fewer than eleven investment banks to manage AIA’s float, indicating its concern to get it away amid market volatility, the Daily Telegraph recently reported. Talks with the UK insurer Prudential over a takeover of AIA collapsed earlier this year, forcing AIG back to its original plan of an Asian listing.
Taiwan’s regulators on Tuesday blocked AIG’s sale of Nan Shan Life, its Taiwan life assurance unit, to a Hong Kong-based consortium for $2.15bn after months of uncertainty, reports the FT. The move is a blow for the US insurer, which hoped to use the sale to help repay loans from its US government rescue in 2008. It follows the collapse in June of AIG’s deal to sell AIA, its main Asian unit, to UK insurer Prudential. Bloomberg says that AIG will consider scaling back Nan Shan’s operations after the rejection, while the NYT cites analysts saying Taipei’s decision was unsurprising and indicated no change in regulatory behaviour.
AIG has approached some of the world’s biggest investors with a view to them taking stakes in AIA, the US insurer’s Asian operation, with strong interest from China, according to people familiar with the matter, reports the FT. As a result, AIG is considering placing as much as 30 per cent with institutional investors and wealthy tycoons, rather than offering minor stakes in the initial public offering, they added. The likeliest cornerstone investors are sovereign wealth funds.
AIG has approached some of the world’s biggest investors with a view to them taking stakes in AIA, the insurer’s Asian operation, with strong interest from China, people familiar with the matter have told the FT. As a result, AIG is considering placing up to 30 per cent with institutional investors and wealthy tycoons, with the most probable cornerstones being provided by sovereign wealth funds. Meanwhile, AIG has sloughed off its money-losing American General Finance lending arm by selling 80 per cent to Fortress — removing a financial drag on the insurer’s recovery, reports the WSJ. The unit may be used by Fortress to buy up other struggling lenders, MarketWatch says.
AIG has approached some of the world’s biggest investors about taking stakes in AIA, it Asian unit, with China registering strong interest, reports the FT. As a result, AIG is considering placing as much as 30% with institutional investors and wealthy individuals, rather than offering minor stakes in the unit’s initial public offering, said people close to the matter. While sovereign wealth funds are the likely cornerstone investors, some of China’s insurers and top banks are also said to be considering both taking stakes and financing others – although it is unclear whether Beijing would approve such moves.