NEW YORK At least a portion of AIG Investments, the money management unit of the embattled insurer, will be sold.
Spokeswoman Braden Bledsoe said the process already has begun, but as of press time, she was unable to give details on when the sale would take place or how it would be conducted.
The federal government within the last month agreed to lend $123 billion to the investment unit's parent company, American International Group Inc., New York. On Oct. 3, AIG Inc. officials said in a news release that they plan to focus on the company's casualty insurance and core property businesses to raise money to repay the federal loan.
Karamvir Gosal, managing director of investment bank Jefferies Putnam Lovell, New York, said it would be difficult to break up the investment unit's $758 billion portfolio, about $127 billion of which was managed for external clients as of March 31, the most recent data available.
Both groups (external client and parent company) of assets are managed by the same people. How do you sell $127 billion in assets? It's not a Neuberger-Lehman situation where big chunks of assets are tied to different themes, he said, referring to the sale of the Lehman Brothers Holdings Inc. asset management unit that included Neuberger Berman LLC.
Investment bankers and consultants have spent the last few weeks speculating on whether the investment management unit will be sold off in parts or remain as is.
One insurance asset management consultant, who requested anonymity, said he had heard the company might sell non-core assets, except for real estate.
An investment consultant, who also asked not to be identified, said he didn't believe AIG Investments could be kept together as a single entity. The consultant said he wonders if other consultants are advising their clients to pull out of AIG Investments. He said he doesn't have any clients with exposure to AIG.
One concern people interviewed for this story had is continuity of management. Mr. Gosal said it wouldn't be surprising to find AIG Investment's portfolio asset managers are being wooed by other companies while the dust settles on the future of the money management unit.
Contact Tim Inklebarger at [email protected]