As bailed-out insurer American International Group
The question is: a vote from whom?
Bankers working on the $15 billion-plus sale of AIG shares this spring have not begun tapping investors, and there is no firm evidence that any person or firm is considering an involvement in what was once the world's largest insurer.
But conversations with banking sources and shareholders make one thing clear: just about everyone agrees that a top-tier investor endorsement would be the best boost for a company rescued by the government from the brink of death with a $182 billion bailout.
The U.S. government, AIG's largest shareholder, has gone down this path before. When it took GM
Following are two of the most plausible scenarios on investors who could give AIG the boost it needs.
The value of the Warren Buffett seal of approval is legendary. In the depths of the financial crisis in September 2008, Buffett invested $5 billion in Goldman Sachs Group Inc
It was an expression of confidence from the right person at the right time. For Buffett, it was a deal that earns his firm, Berkshire Hathaway,
There have been others too -- Buffett stepping in as chairman of Salomon Brothers in the 1990s during its crisis, his bet on the economy with the purchase of railroad Burlington Northern, and so on.
AIG's largest investor outside of the U.S. government, Fairholme Funds Inc's
Some bankers raised doubts on the likelihood of a deal happening.
If he was willing to buy straight common stock like the public, then it would be a good thing, yeah. But he doesn't do that very often, one banker said.
Buffett often prefers to invest in instruments that give him some downside protection or upside potential, such as convertible securities, preferred shares or warrants.
The biggest problem with Buffett getting involved with AIG may be the tangled legal history between the two companies.
Buffett's reinsurer, General Re, paid the government just over $92 million last year to settle accusations it helped AIG concoct sham transactions to boost its financial results.
Top General Re officials faced criminal charges over the transactions, which Berkshire Hathaway has insisted were made without briefing Buffett.
Buffett also has shown a reluctance to invest in complicated financial companies after getting burned in the past. He turned down several troubled companies seeking capital during the financial crisis, including Lehman Brothers.
Another option for the U.S. government -- one that may be an easier way to raise capital compared with Buffett but perhaps tougher to sell to the public -- is selling stakes to sovereign wealth funds from Asia or the Middle East.
But investors know the government has more than 1.6 billion shares to sell, that it intends to make a profit and that the floor to do that is $29.70 a share. The shares are trading in the low $40s, and bankers say the share offering would be more likely to price in the lower-to-mid $30s.
Securing a major commitment from a government like Singapore or Abu Dhabi early in the process could help put a floor under the shares and add to the profit.
What happens with (sovereign funds) in a lot of cases is you shrink the available supply because you have at least some indications from them early in the marketing process, and it drives that view of, 'wait a second, we may actually have X billion of demand for Y billion of supply, one banker said.
Going to a sovereign fund carries multiple risks, though. If the fund gets spooked by price changes or other material events, it can pull out at the last moment, forcing underwriters to sell a much larger number of shares to other investors and weighing on the price.
There is also an image issue for the government to consider -- the perception that the Treasury used taxpayer dollars to rescue the company and is now giving some of the possible gains from the deal to foreigners.
But those issues aside, a third banker said there was no reason not to make a sovereign fund part of the process.
Keeping people competitive by going to multiple sources of demand is definitely the way to get it done. That definitely would be part of any plan. Having them be part of the leverage will be important, the banker said.
(Editing by Robert MacMillan)