AIA shares slide after $6 billion AIG selldown

Tue Mar 6, 2012 5:13am EST
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By Denny Thomas

HONG KONG (Reuters) - Shares in AIA Group Ltd had their second-biggest one-day 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 U.S. insurer will use the proceeds to repay part of the $182 billion bailout it got in 2008 from the U.S. 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 best-performing 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 second-biggest 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.   Continued...

The logo of the AIA tower is seen at its entrance in Hong Kong July 13, 2010.   REUTERS/Tyrone Siu