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AIG close to two big deals

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Published May 4, 2009 at 11:24 AM
aig window-125x100.jpgIt looks like troubled insurer American International Group Inc. (NYSE:AIG) is close to selling its Japanese headquarters as well as International Lease Finance Corp. The divestments would be two of its largest to date in its quest to pay off the government's $180 billion bailout.

There are apparently two bidders for AIG's 15-story Japanese headquarters, and the expected buyer is a Japanese insurance company, according to The Wall Street Journal. The report says bids, which are reportedly around $1 billion, are in line with what the company was asking.

Meanwhile, the Financial Times reported that a sale of AIG's airplane leasing business for $4.5 billion to $6 billion could also happen in the next few weeks. The insurer reportedly 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 reported that the unit may sell for under $5 billion.

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. The Financial Times reported that the government may even extend AIG a $5 billion bridge loan to divest ILFC. The credit line would come from the $180 billion bailout the government has already extended to the insurer.

There are several other sales being finalized at the moment. Here's a run down:

  • 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 and AIG Star Life Insurance Co. are also up 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.
  • AIG's property and casualty division could also be on the block or may spin out into a public entity. 

So far AIG has sold off $4.4 billion in assets. Here's a list:

The sale of AIG's Japanese headquarters and ILFC would boost AIG's government payoff to around $10 billion. - Maria Woehr

Also see:
AIG's Liddy to testify on taxpayers investment
AIG strategy may change if AIU spins out
AIG to sell ILFC at fire sale price?
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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