DealZone

Deals wrap: Treasury sells stake of AIG

May 25, 2011

The Treasury made a small profit when it sold a portion of its shares in AIG, but it was unclear how its investment in the beleaguered insurer will ultimately fare.

Tuesday’s $8.7 billion stock offering, (being dubbed by some as AIG’s re-IPO) which included 200 million shares sold by the Treasury and 100 million sold by AIG itself, is far smaller than the $10 billion to $20 billion deal some banking sources had suggested earlier this year, hinting at a potential lack of investor interest.

With the sale, the Treasury has raised $5.8 billion of the $47.5 billion it needs to break even and now has another 1.5 billion shares to sell.

The government can claim a small victory with this sale, but the Deal Journal says the biggest beneficiary of the decision are the banks underwriting the sale.

A day after Yandex surged in its debut coupled with LinkedIn’s record IPO last week, comes the news that the maker behind a series of popular games on Facebook, Zynga, may file for a multibillion-dollar IPO as early as this week.

Can Zynga be blamed for attempting to cash in on the latest Internet IPO craze? Hardly not, but each new booming success leads to more caution of another dreaded tech bubble waiting to burst.

Finally, Fiat exercised an option to acquire a further 16 percent of Chrysler bringing its stake to 46 percent following the Detroit-based carmaker repayment of $7.6 billion in U.S. and Canadian government loans from its 2009 bailout.

Fiat’s chief executive said postponing the purchase of the stake would only make any potential deal more expensive.

 

Comments
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“The government can claim a small victory with this sale”

Uh, no. The sale reveals that there was little real demand for AIG shares. There were more flippers than genuine buyers. That will be remembered on future sales, and buyers will require a greater discount to the current market price to get them to part with money for shares of AIG.

Posted by DavidMerkel | Report as abusive
 

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