AIG's Asian Life Insurer IPO: Overwhelming Institutional Demand?
AIG, one of the high-profile beneficiaries of the massive U.S. bailout of Corporate America, is said to have strong interest from a large Chinese sovereign wealth fund, China Investment Corp., as well as from China Life Insurance, Ping An Insurance and Taikang. The IPO order book is now expected to close to institutional buyers on Oct. 19, a day after it had opened to retail investors.
The conflicting interest between institutional and retail investors may explain the poll results last week that predicted AIA's IPO would likely price in the middle of its price range, at HK $19.14 a share. Red-hot IPOs tend to price above their initial range.
AIG, which is expected to sell about 50% of its AIA stake, plans to launch the IPO at the end of the month. For U.S. taxpayers, that could be good news. The federal government owns approximately an 80% stake in AIG, which is seeking to repay the $182.3 billion in bailout funds it received.