AIA shares slide after $6 billion AIG selldown
HONG KONG SHARES in AIA Group Ltd had their second-biggest oneday percentage fall on Tuesday after its former parent, American International Group (AIG)), raised about $6 billion by selling shares at the bottom end of the marketing range.
AIG’s long-awaited selldown punctured a rally in AIA shares this year, which were driven up on the back of strong earnings and on expectations of a bid for ING’s Asian life insurance business.
The US insurer will use the proceeds to repay part of the $182 billion bailout it got in 2008 from the US government at the height of the global financial crisis. AIG said it will not sell any more AIA shares until September 4
Still, analysts said AIG’s remaining stake will be seen as a potential overhang on the stock and any run-up in the price could make investors suspicious about AIG offloading its remaining 18.6 percent stake valued at about $7.7 billion.
AIA shares shed 8.4 percent to HK$26.75 as trading resumed on Tuesday, compared with a 2.2 percent drop in Hong Kong’s benchmark Hang Seng share index.
Despite the fall, AIA is the bestperforming stocks in the Hang Seng index over the past year, having risen about 27 percent.
AIG’s $6 billion selldown in AIA makes it the secondbiggest selldown globally behind Vodafone Plc’s $6.6 billion block sale in China Mobile Ltd in 2010, according to Thomson Reuters data.
AIG sold 1.72 billion ordinary shares at HK$27.15 each in a block sale to unnamed institutional investors. The shares were initially offered in a range of HK$27.15-$27.50, a discount of up to 7 percent to AIA’s closing stock price on Friday.
“The AIA stock is reacting on the back of the huge placement,” said Colin Ng, head of equities at Barings Asset Management.
“It was widely known to the market that AIG will unwind its position at some point. We hold the stock for the fundamental value and the earnings potential it has,” said Ng, who helps manage about $8 billion in Asia, including AIA stock.
Now Asia’s third-largest insurer, AIA has built a sprawling and successful business across the region with an army of hundreds of thousands of agents.