American International Group Inc. (AIG) has reached an agreement to sell a part of its investment advisory and asset management business to Bridge Partners, L.P. for about $500 million. Bridge Partners, LP is owned by Hong Kong-based private-equity firm Pacific Century Group.
The $500 million purchase price includes a cash payment of about $300 million at closing, plus future payments consisting of a performance note and a continuing share of carried interest.
The units being sold operate in 32 countries and manage about $88.7 billion of investment of institutional and retail clients. However, AIG will retain its in-house investment operation that manages approximately $480 billion of assets.
Win J. Neuger will carry on as Chief Executive Officer of the new business. The existing management team will also remain in place. AIG’s financial advisor was UBS Investment Bank of UBS AG (UBS) while for Pacific Century Group, Perella Weinberg Partners acted as the financial advisor. Debevoise & Plimpton LLP served as legal advisor to AIG. The deal is subject to the usual regulatory and other approvals.
This sale is in line with the AIG’s restructuring plan of trimming its business after the company’s balance sheet was severely hurt by the subprime crisis. Although the company has been able to head off bankruptcy as a result of the bail-out funds received from the U.S. government, we believe that the company continues to face a significant threat to its franchise, business model, customer base and distribution network as a result of the financial crisis and a significant exposure to residential and commercial mortgage-backed securities.
Similar to AIG, Lincoln National Corporation (LNC) recently sold Delaware Investments, its investment management wing to Australia’s Macquarie Group for approximately $428 million.
Read the full analyst report on “AIG”
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Read the full analyst report on “LNC”
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