MutualFundWire.com: AIG Crosses the Bridge to a $500 Million Deal

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Saturday, September 5, 2009

AIG Crosses the Bridge to a $500 Million Deal

It was anything but a quiet weekend for AIG executives. On Saturday, the insurer inked a deal to sell a chunk of its investment advisory and asset management business to Bridge Partners for $500 million. AIG's SunAmerica mutual fund business is not part of the sale. Bridge -- owned by Hong Kong magnate Richard Li's Pacific Century Group -- is anticipated to potentially sub-advise mutual funds for SunAmerica Asset Management Corp.

The business being sold, which operates in 32 countries, manages $88.7 billion for retail and institutional customers across listed equities, fixed income, hedge fund of funds and private equity strategies. Win J. Neuger will remain CEO of the business, and the rest of the management team will stay intact.

The $500 million price tag includes a payment of $300 million in cash at closing, plus additional future consideration that includes a performance note and a continuing share of carried interest.

"After conducting an extensive and rigorous auction process, we concluded that this transaction provides fair value for AIG and achieves the greatest long-term stability and potential for the business, its clients, business partners and employees," said Alain Karaoglan, senior vice president for divestiture at AIG, in a news release.

AIG will keep its in-house investment operation, which counts $480 billion of AUM.

UBS Investment Bank was AIG's financial advisor, while Debevoise & Plimpton LLP provided legal counsel. Perella Weinberg Partners served as Pacific Century Group's financial advisor.

Company Press Release

NEW YORK--(BUSINESS WIRE)--Sep. 5, 2009-- American International Group, Inc. (AIG) today announced an agreement to sell a portion of its investment advisory and asset management business to Bridge Partners, L.P., a company owned by Pacific Century Group (PCG), the Hong Kong-based private investment firm. AIG is retaining its in-house investment operation that oversees approximately $480 billion of assets under management.

The purchase price of approximately $500 million consists of a cash payment of approximately $300 million at closing, plus additional future consideration that includes a performance note and a continuing share of carried interest.

"After conducting an extensive and rigorous auction process, we concluded that this transaction provides fair value for AIG and achieves the greatest long-term stability and potential for the business, its clients, business partners and employees," said Alain Karaoglan, AIG Senior Vice President - Divestiture.

The units being sold operate in 32 countries and manage approximately $88.7 billion of investments of institutional and retail clients across a variety of strategies, including private equity, hedge fund of funds, listed equities and fixed income. Win J. Neuger will continue as Chief Executive Officer of the new business and the existing management team will remain in place.

Monika M. Machon will continue in her role as Senior Vice President and Chief Investment Officer of AIG, overseeing AIG's investment operation.

UBS Investment Bank acted as financial advisor to AIG and Perella Weinberg Partners acted as financial advisor to Pacific Century Group on this transaction. Debevoise & Plimpton LLP served as legal advisor to AIG.

The transaction is subject to receipt of regulatory approvals and other consents.

About Pacific Century Group:

Pacific Century Group (PCG) was established in 1993 and has interests in infrastructure, property, satellite communications and other investments in the Asia Pacific region, including Singapore, Hong Kong and Japan. PCG has a strong track record of holding and developing assets over the long term, and has a network of well-established connections in Asia. PCG previously owned Pacific Century Insurance, a leading Hong Kong life insurance company that included PCI Investment Management. With support from PCG, PCI Investment Management's assets under management increased seven-fold between 2000 and 2007, with a number of the company's funds receiving awards from Standard & Poor’s and Lipper.

About American International Group, Inc.

American International Group, Inc. (AIG), a world leader in insurance and financial services, is the leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG’s common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo.