US insurer American International Group Inc (NYSE: AIG) said on Thursday it had started a process to dispose of as much as USD2bn (EUR1.6bn) worth of shares of its Hong Kong unit AIA Group Limited (HKG:1299) to institutional investors.
Following this sale, AIG’s fully-owned unit AIA Aurora LLC will transfer its remaining stake in AIA to AIG.
The sale will be carried out in Hong Kong, AIG said, adding it would use the net cash obtained from it for general corporate projects, potentially including share buybacks, or other capital management purposes.
Separately, the board of the US insurer has cleared a plan to use up to USD5bn to repurchase AIG common shares with par value of USD2.50 apiece from the US Department of the Treasury.
This stock buyback approval replaces all previous ones, the company said, warning that there could be no assurance that the US Treasury would accept such an offer.
In March 2012, AIG announced the sale of 1.72bn AIA ordinary shares for some USD6bn to institutional investors. According to AIA, those shares amounted to a stake of around 14.3%, leaving AIG with some 18.6% left in the Hong Kong unit.
At the time, AIG pledged not to shed further AIA stock until 4 September according to the terms agreed with the placing managers, it has said. Those funds were to be used to cut AIG’s debt to the US Treasury, following its bailout in 2008.