AIA to Launch HK IPO Directly

AIA, the Asian life insurance unit of bailed-out insurer AIG, has given up a pre-IPO strategic investor introduction plan and intends to debut on the Stock Exchange of Hong Kong directly.

As US's midterm election approaches, the US insurance giant made a decision to sell a 30 percent stake in AIA to institutional investors and another 30 percent on the open market. At the start of this month, it held a bid for a 30 percent stake in the unit and the stake was initially estimated at about USD 10 billion.

Chinese investors, which hesitated to acquire assets overseas due to factors including price and risk, were expected to be the winner. An investment consortium led by Guo Guangchang, chairman of mainland conglomerate Fosun Group, showed great enthusiasm on the deal, revealed people close to the deal. Others led by Fred Hu, the former chairman of Goldman Sachs for the Greater China region, and Shan Weijian, chairman and CEO of Pacific Alliance Group, also participated in the bidding. All of them had submitted bid documents.

However, owning to price factor, all of them are said to quit the bid. "AIG wrote to several bidding groups last weekend that AIA would kick off IPO procedures directly," said a financial consultant with a Chinese bidding group. And according to principal of the financial consultant, those who have received the letter may include a consortium formed by China Cinda Asset Management Corp. and China Life Insurance Co., Ltd. (SHSE: 601628 and SEHK: 2628), a consortium established by a PE fund led by Fred Hu and Ping An Insurance (Group) Company of China, Ltd. (SEHK: 601318 and SEHK: 2318), a consortium set up by Industrial and Commercial Bank of China (ICBC, SEHK: 1398 and SHSE: 601398) and its Hong Kong investment bank unit ICBC International Holdings Ltd., and a consortium led by Shan Weijian.

AIG decided to list AIA on the Hong Kong bourse as early as the start of this year. But in the eve of the listing, it reached an initial agreement with Prudential over selling a 100 percent stake in the target for USD 35.5 billion. The listing plan, as a result, was laid on the table. But in June this year, the UK-based insurer failed to gain approval from its shareholders for the acquisition. It then lowered the consideration to about USD 30.38 billion, which failed to win a nod from the board of the US insurer finally. In those Chinese investors' opinion, the revised consideration is not low. But AIG expects for USD 32 billion. Notably, it wants the deal to be paid in cash.