Big banks lined up for $10 billion AIA IPO: sources

 @ibtimes
on February 11 2010 7:57 AM

HONG KONG - American International Group has lined up all the major investment banks to underwrite the public listing of its Asian life insurance unit, in what may be Hong Kong's biggest IPO since 2006, banking sources said.

AIG, bailed out by the U.S. government during the global financial crisis, has chosen Citigroup, Credit Suisse, Goldman Sachs, BofA Merrill Lynch, UBS, CCB International and ICBC International to underwrite the IPO of American International Assurance (AIA), which sources say could raise more than $10 billion.

AIG had already chosen Deutsche Bank and Morgan Stanley as joint global coordinators for the offering.

Investment bankers in Hong Kong have been anxiously awaiting the choice of underwriters as a $10 billion IPO, at a standard 3 percent charge, could generate around $300 million in fees.

The wide selection ensures that everyone gets a piece of that fee pie, but some may grumble as the pie will be spread more thinly.

The selection of underwriters is a signal, too, that the IPO is moving forward after months of silence. It could potentially be Hong Kong's largest since Industrial and Commercial Bank of China raised $14 billion in 2006.

AIA, which AIG's former CEO Maurice Hank Greenberg once described as the group's 'crown jewel', has a long history in Asia, particularly in China, and has dominant market share in several, fast-growing countries.

An AIA spokeswoman declined to comment.

News of AIA's underwriters coincided with news of two other large Asian financial sector IPOs.

Mid-sized Chinese broker Huatai Securities priced its IPO to raise $2.3 billion in mainland China's biggest offering this year.

Korea Life Insurance, the country's No.2 life insurer, said it would raise up to $2 billion through an IPO next month.

AIA will hold an analysts' presentation to its bookrunners on Friday and is eyeing an end-March listing hearing from the Hong Kong Stock Exchange. The IPO roadshow is expected to start in mid-April, one of the sources said.

None of the sources, who have direct knowledge of the deal, wanted to be identified as they were not authorized to speak publicly about the IPO.

TIMING IS KEY

Timing is particularly key for AIA's offering, as Hong Kong's IPO market has lost some steam after a blistering 2009, and several new issues have dropped on their debut this year.

Russia's UC RUSAL and Canada-listed SouthGobi are both down by double digits from their IPO price.

In neighboring Shanghai, IPO fever has cooled with investor interest waning as the stock market sags and Chinese authorities keep up a steady stream of new share approvals in a bid to head off potential asset bubbles.

Still, one source close to the AIA deal expects the insurer to raise $10-$15 billion, and others said it could even go as high as $20 billion, depending on how much of the company is sold.

The sources said the deal size was expected to be finalized in the next couple of days.

JP Morgan is advising AIG through its restructuring process along with Blackstone Group.

(US$1=HK$7.75)

(Writing by Michael Flaherty, Editing by Valerie Lee and Ian Geoghegan)

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