The sale of
American International Group Inc.
) aircraft-leasing unit - International Lease Finance Corporation
(ILFC) -- missed its latest mid-June deadline, compelling the
company to register for an initial public offering (IPO) of the
In Dec 2012, about 80% of ILFC was vended by AIG to a Chinese
consortium, including New China Trust Co. Ltd., China Aviation
Industrial Fund and P3 Investments Ltd., for approximately $4.23
billion. Further, the company has granted an opportunity to these
investors to buy another 9.9% in ILFC, bringing to total deal
value to about $5.28 billion. Subsequently, AIG would retain the
remaining 10% stake in ILFC.
However, the deal was scheduled to culminate by the second
quarter of 2013 but the buyers failed to meet the deadlines twice
on May 15 and Jun 14, due to the delay in attaining regulatory
approvals. Hence, AIG extended the closure of sale by Jul 31,
2013. However, the company would have to go with its plan to
launch an IPO if this deadline goes void too.
On the other hand, if the deal is closed within the decided
time, then AIG will have the IPO registration cancelled.
Previously, before the agreement of ILFC's sale, AIG was mulling
over its IPO last year.
While AIG is giving up on ILFC to focus on its core-insurance
operations and have a lean but sturdy business profile, the
rising demand for aircrafts in Asia supports for the purchase
decision of the Chinese syndicate. The deal will also fuel the
progression of ILFC in the potentially growing Asian markets,
while strengthening its position in the global aviation
The complete repayment of the government bailout loan and
asset disposals has helped AIG to focus on its core insurance
operations and attain a flexible capital position. The progress
is also reflected by the modest growth in the company's
financials. We believe that the dual strategy laid by AIG bodes
well for the future of ILFC and will help it better to optimally
leverage its potential capacity.
Along with AIG, its peers such as
CNO Financial Group Inc.
XL Group Plc
) carry a Zacks Rank #2 (Buy).
AMER INTL GRP (AIG): Free Stock Analysis
CIGNA CORP (CI): Free Stock Analysis Report
CNO FINL GRP (CNO): Free Stock Analysis
XL GROUP PLC (XL): Free Stock Analysis Report
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