The
U.S Treasury department has announced on Friday that it plans to raise $5bn by selling American International Group (NYSE:AIG) stocks thereby reducing its
stake in the insurer from 61% to 55%.
The government is aiming to reap $300mn
in profits from a price tag of $30.50
per share, at an approximate $1.78
profit per share.
The
business’s shares increased by 1.62% on Friday
to close at $31.34.
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The
treasury has already made three
successful offerings of AIG stocks at above the breakeven price. The
current offer includes 163.9 million
shares is expected to close within a week. Once the sale is complete, the
treasury will be left with $25bn outstanding
investment in AIG.
The
government needed to sell the shares above $28.72 per share on an average to
earn any profit. The three previous offerings were made for $29, then again for
$29 and finally for $30 per share.
It
is also learned that AIG will buy back
$3bn out of the $5bn offering.
AIG
is expected to receive “systemically
important” label from the US council of regulators as it is still not overseen
by a single regulator. Once the label is applied, AIG will receive supervision directly
from Federal Reserve.
The current
offering was led by Bank of America (NYSE:BAC)., Barclays (NYSE:BCS), Citigroup (NYSE:C), Credit
Suisse Group AG (NYSE:CS), Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase
& Co., Macquarie Group Ltd., Morgan Stanley, UBS AG and Wells Fargo &
Co.
AIG Profits Increases by 27%
On 2nd
August, the company posted $2.3 billion
profits in Q2 2012, thereby showing an impressive increase in profits by 27%. The book value (difference between assets and liabilities) has also
improved in Q2 to $60.58 per share
from $57.68 reported in Q1. The business’s $1.9bn operating income has beaten
the Wall Street’s estimates.
Chief
Executive Robert Benmosche has said in a conference call that AIG aims to
achieve 10% Return-on-Equity by 2015, reduce costs, invest $30 billion in share
buybacks, acquisitions and other activities.
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Relevant
Links
Treasury
plans to sell AIG stock worth $5 billion [Huffington Post]
Treasury to sell more
AIG shares [CNN Money]
Treasury
says to raise $5 billion from AIG stock sale [Chicago Tribune]
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