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Published July 15, 2009 at 9:20 AM
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 It looks like efforts to sell American International Group Inc.'s (NYSE:AIG) asset management unit AIG Investments are dragging.
Negotiations to finalize a deal with U.S. asset manager Franklin Resources Inc. have stalled, and now the asset manager has dropped out of a consortium that was looking to buy the unit, according to Reuters. AIG had been in talks to finalize the deal with Franklin Templeton Investments Inc. since May, and the price of the unit had fallen in negotiations from $800 million to between $350 million and $450 million. Apparently, one of the key factors the asset manager was a stickler on was replacing the management of the unit, according to a report in The Wall Street Journal.
Talks are apparently continuing with others in the consortium, which includes private equity firm Crestview Partners and Richard Li, the prominent Hong Kong businessman who runs Pacific Century Group and is the son of Li Ka-shing.
The insurer is in the middle of several other asset sales to pay back the government's bailout. Here is the latest progress on the most prominent auctions: - AIG's Advisor Group division, housed within its 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 the division, leaving GTCR
Golder Rauner LLC and several new potential buyers, The Deal's Michael
Rudnick reported. However, the three broker-dealers have lost nearly 14% of their advisers since February.
- The sale of AIG's aircraft leasing unit, International Lease
Finance Corp., or ILFC, could be finished soon. Greenbriar Equity Group
LLC and Onex Corp. may be closing in on the acquisition of AIG's ILFC.
The Financial Times
had reported 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. The FT 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 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.
- The auction for Taiwanese life insurance unit Nan Shan Life Insurance Co. began
on July 3. Among the buyout shops reviewing information about the sale
are the Carlyle Group, Kohlberg Kravis Roberts & Co., Affinity
Equity Partners Ltd. and MBK Partners Ltd., sources tell Bloomberg. According to Dealscape,
other bidders expected to participate in the auction include Primus
Financial Holdings Ltd., Cathay Financial Holding Co., Chinatrust
Financial Holding Co., Fubon Financial Holding Co., Shin Kong Financial
Holding Co. and Mega Financial Holding Co. The unit is expected to
command a $2 billion valuation.
- The insurer has apparently decided to
resume talks with MetLife Inc. (NYSE:MET) to sell the insurer its
American Life Insurance Co. unit, known as Alico. A report by the Financial Times
says that a sale of the unit could raise $15 billion. Preliminary talks
with MetLife ended in March, when AIG got another bailout. Apparently at
the time, AIG wanted around $20 billion for the unit, and MetLife
offered $11 billion. AIG was in the process of spinning
off the unit in preparation for a listing in Hong Kong, similar to its
spin off of AIA, its Asian life insurance unit. However, a sale of the
unit could allow the government to recoup some of its cash even earlier.
To see the latest on all of the AIG auctions check out The Deal Pipeline (subscription required). - Maria WoehrAlso see: AIG to sell Alico to MetLife?AIG auction: Talks with MetLife 'very preliminary'
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