Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Innovation Investing Conference
    • 2022 Defined Contribution East Conference
    • 2022 ESG Investing Conference
    • 2022 DC Investment Lineup Conference
    • 2022 Alternatives Investing Conference
Breadcrumb
  1. Home
  2. Online
February 02, 2009 12:00 AM

For sale at AIG: PE firms are likely suitors for asset unit

Bids are expected this week for AIG Investments' $111B in external-client assets

Mark Bruno
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    With AIG shedding a number of its businesses to pay back government loans, its money management unit — which runs more than $111 billion in global assets for external institutional and retail clients — appears to be the next business to be put on the block by the distressed insurance giant.

    Sources throughout the investment industry said that officials for New York-based American International Group Inc. sent the investment management unit's books out to a number of interested buyers near the end of January, and bids are due this week.

    It’s still early in the sale process, of course, but the sources said many of the private-equity firms that pursued New York-based Lehman Brothers Holdings Inc.’s Neuberger Berman LLC investment management division last year are early front-runners for AIG Investments, one of the largest money management units in the world.

    That means Bain Capital LLC of Boston and Hellman & Friedman LLC of San Francisco — whose combined $2.15 billion bid for Neuberger was topped by Neuberger’s senior management in December — are heading the list of potential buyers, sources said. Other private-equity firms, such as Carlyle Group LP in Washington and Kohlberg Kravis Roberts & Co. of New York, could emerge as strong candidates as well.

    “It’s a distressed sale, and many of the private-equity firms that have been trying to buy their way into the asset management business think they might be able to buy this group at a relative bargain,” said one investment banker familiar with the sale, who spoke on condition of anonymity. “But we should find out if that’s the case soon enough.”

    Charlyn Lusk, spokeswoman for Bain Capital; Monica Everett, spokeswoman for Hellman & Friedman; Michelle Ong, spokeswoman for Carlyle Group; and Peter McKillop, spokesman for KK; each declined to discuss a potential bid for the business. Win Neuger, chairman and chief executive of AIG Investments, was not available to discuss the potential sale, and spokesman Joe Norton said that the firm would not comment on any of its asset sales or divestitures.

    AIG Investments runs a total of $676 billion in assets. But about $565 billion is affiliated with AIG’s insurance business. The company has elected to sell, as a stand-alone business, the part of AIG Investments that runs the remaining $111 billion for outside clients.

    Price tag: $1.5 billion to $2 billion

    Sources with knowledge of the sale, which is being run by investment bankers at Zurich, Switzerland-based UBS AG, said the AIG money management unit could end up fetching $1.5 billion to $2 billion.

    But the sources said AIG’s money management unit has relied heavily on the parent company’s global presence for distributing its products, and bankers are still attempting to measure the unit’s true value as a stand-alone entity. This could lead to a wide range in bids submitted in the first round of the sale process this week, so investment bankers were reluctant to put a specific price on the business just yet.

    No matter the price tag, however, the sale is still expected to register as one of the largest asset management deals in the last year.

    Money management transactions in the United States in 2008 totaled just $6.3 billion, the lowest levels in years, according to data compiled by New York-based investment bank Cambridge International Partners Inc.

    “Large private-equity firms are about the only players that have a lot of firepower to support a major transaction such as this one,” said John Temple, managing director at Cambridge.

    There is a possibility, however, that several smaller private-equity firms could team up to place a joint bid on the AIG business. Several sources said that there have been more than a dozen such firms “kicking the tires” in recent weeks, which could ultimately play a factor in the bidding war.

    Part of the reason AIG Investments could be drawing so much interest is the distressed nature of the sale, said Kevin Pakenham, a London-based managing director with New York investment bank Jefferies Putnam Lovell. But the business also has a fairly wide set of investment products that could be attractive to suitors looking to launch a diversified asset management business, he pointed out.

    About $48 billion, or more than 40% of AIG Investments’ $111 billion in external assets under management, is in its U.S. and international fixed-income strategies. But it also has another $16 billion of assets in alternative investment strategies, $15 billion in international equities, $14 billion in multistrategy hedge funds, $11 billion in U.S. equities, and about $7 billion in real estate products.

    The asset breakdown between retail and institutional clients couldn’t be ascertained by press time.

    Need for cash

    Potential buyers had expressed considerable interest in acquiring some of these pieces of the AIG Investments business, sources added. But apparently, AIG executives are looking to sell the unit in one piece, as there is a pressing need to raise cash and repay the bulk of the federal rescue money, which totaled nearly $150 billion.

    It is unclear when the sale will be completed, but AIG in recent weeks has accelerated its effort to shed the unit. On Jan. 20, for instance, it made Mr. Neuger responsible for overseeing the unit that is for sale, and also appointed Senior Managing Director Jeffrey Hurd as head of asset management restructuring — a new post.

    After the sale, AIG is expected to focus on the sale of its $12.4 billion global real estate fund management business, and perhaps AIG Retirement in Houston, sources added.

    Mark Bruno is a reporter at InvestmentNews, a sister publication of Pensions & Investments

    Recommended for You
    Good_Friday_i.jpg
    No P&I Daily on April 15
    Presidents Day illustration. Text with uncle Sam's hat and USA flag waving on blue star pattern background
    No P&I Daily on Presidents Day
    Coming_Soon_i.jpg
    P&I 1,000 coming out Feb. 14
    Alternatives: Investing Across the Spectrum
    Sponsored Content: Alternatives: Investing Across the Spectrum

    Reader Poll

    May 23, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Crossroads: Politics, Inflation, & Bonds
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Q2 2022 Credit Outlook: Carry On
    Leverage does not equal risk
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    May 9, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Innovation Investing Conference
      • 2022 Defined Contribution East Conference
      • 2022 ESG Investing Conference
      • 2022 DC Investment Lineup Conference
      • 2022 Alternatives Investing Conference