Bloomberg News

AIG to Sell More Than 20% of Plane-Leasing Business in IPO

September 02, 2011

(Updates with analyst’s valuation in the third paragraph.)

Sept. 2 (Bloomberg) -- American International Group Inc., the bailed-out U.S. insurer, plans to sell more than 20 percent of its ILFC Holdings Inc. plane-leasing subsidiary in an initial public offering and divest most of the unit over time.

Details including the number of shares offered, price and timing haven’t been determined, New York-based AIG said today in a regulatory filing. None of the proceeds will go to ILFC, the filing said.

AIG, led by Chief Executive Officer Robert Benmosche, is selling assets as the company seeks to exit a government rescue that was valued at $182.3 billion. ILFC, the world’s largest independent aircraft lessor, may be worth about $3 billion, said Paul Newsome, an analyst with Sandler O’Neill & Partners LP.

“One of the problems with the offering of ILFC is there’s a very wide range of valuations,” Newsome said in a phone interview. “My sense is investors will probably take the most pessimistic view until it’s completed.”

ILFC, headed by Chief Executive Officer Henri Courpron, has more than 1,000 owned or managed aircraft, as well as commitments to buy almost 240 new planes. Revenue topped $2.2 billion in the six months ended June 30.

“AIG has determined that ILFC is not one of its core businesses,” the insurer said. “The IPO is the first step in AIG’s plan to monetize its interest in ILFC.”

AIG said it intends to dispose of at least 80 percent of ILFC within three years of the IPO. AIG, once the world’s biggest insurer, said it needs approval from the U.S. Treasury Department, which owns about 77 percent of the firm’s stock.

AIG’S Sales

AIG sold a 67 percent stake in Hong Kong-based insurance company AIA Group Ltd. for $20.5 billion in an IPO last year. AIG sold American Life Insurance Co., a carrier with business in more than 50 companies, to MetLife Inc. in November for about $16 billion.

At least 11 companies, including ILFC, filed for U.S. IPOs this week, compared with 15 in the previous week, according to data compiled by Bloomberg. More than 100 U.S. IPOs raised $35.8 billion this year, the most of any country.

Citigroup Inc., JPMorgan Chase & Co. and Morgan Stanley are managing the offering, according to the filing. AIG bought the plane-leasing business more than 20 years ago.

--Editors: Rick Green, William Ahearn

To contact the reporters on this story: Andrew Frye in New York at afrye@bloomberg.net. Julie Alnwick in London at jalnwick@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net. Jennifer Sondag at jsondag@bloomberg.net


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