The sale of American International Group Inc.'s (NYSE:AIG) aircraft leasing unit International Lease Finance Corp., or ILFC, is apparently heating up at fire sale prices. The Financial Times is reporting that the insurer has received second-round bids from private equity firms Thomas H. Lee Partners and Carlyle Group, Onex Corp. and Greenbriar Equity Group, as well as an unidentified third bidder.
As Dealscape previously noted, ILFC has a book value of $7.5 billion as of Sept. 30, and bids were supposed to come in at around $5 billion. However, Reuters is reporting that the unit may sell for under $5 billion. The figure is not surprising considering AIG needs to repay $100 billion in debt and does not have the cash to meet debt obligations of $33 billion for ILFC's operations in 2009 due to the struggling airline business and loss of its federal commercial paper lending facility after key credit ratings were cut. Finding bidders with the financing to purchase the unit has become so tough that AIG promised to provide backstop financing available through the U.S. Federal Reserve in order to sell off ILFC.
The Financial Times reported that the government may even extend AIG a $5 billion loan to divest ILFC, which should just about cover the purchase for the private equity firm that decides to buy the unit. The credit line would come from the $180 billion bailout the government has already extended to the insurer. The sale may be finalized soon, according to reports.
AIG has been struggling to sell off assets. Here's an update on the latest assets sold and the progress of assets for sale.
Sold:
Still for sale:
- AIG's Advisor Group division, housed within AIG's retirement services division, which consists of three broker-dealers -- SagePoint Financial Inc. of Phoenix, FSC Securities Corp. of Atlanta and Royal Alliance Associates Inc. of New York -- could sell for about $200 million. Private equity firms Clayton, Dubilier & Rice Inc. and Warburg Pincus have dropped out of the bidding for AIG's Advisor Group division, leaving GTCR Golder Rauner LLC and several new bidders, The Deal's Michael Rudnick reported. However, the three broker-dealers have lost nearly 14% of their advisers since February.
- AIG's asset management business, AIG Investments, could get bids anywhere between $400 million and $800 million for the $100 billion portfolio in the division that manages assets for pension funds, insurance companies and wealthy individuals, said a source close to the situation. Bidders include Ashmore Investment Management, Hellman & Friedman LLC, Rhone Group and TA Associates as well as mutual fund manager Franklin Templeton and asset manager Southgate Alternative Investments, according to The Wall Street Journal. AIG wants to finish the sale by the end of May, but it could run into trouble if bids sink lower due to valuations of the units.
- The AIG Global Real Estate fund management business has around $12.4 billion in assets and $5.2 billion in equity capital. The unit could be sold for about $9 billion. Interested bidders could include BlackRock Inc. and Blackstone Group LP (which might be a conflict because Blackstone is advising). Included in that is its Japanese headquarters in Tokyo, which may bring in more than $1 billion.
- AIG Edison Life Insurance Co. and AIG Star Life Insurance Co. are also for sale. Bidders could include: Prudential Financial Inc., Manulife Financial Corp., Allianz Group, Aegon NV, Nippon Life Insurance Co., Tokio Marine Holdings Inc., Gibraltar Life Insurance Co. Ltd., T&D Holdings Inc. and Manulife Life Insurance Co. The value is estimated to be around $1 billion.
The sale of AIG's Alico, Philamlife unit and AIA were all scrapped after the government's last bailout. - Maria Woehr
Also see:
AIG asset management sale heats up
AIG to Fed: You pay us so we can pay you
AIG sells auto insurance asset for $1.9B
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