American International Group, Inc. (AIG) has sold its investment advisory and asset management business to Richard Li's Pacific Century Group (PCG), the Hong Kong-based private investment firm. The unit has been acquired for $500 million, which includes a cash payment of approximately $300 million at closing and additional future consideration that includes a performance note and a continuing share of carried interest. The AIG unit has been acquired by Bridge Partners, L.P., a company owned by PCG.
India's Religare Enterprises had partnered with Australian banking giant Macquarie to bid for the unit. Reports later also suggested that the Delhi-based firm may buy the asset management firm independently.
AIG has been looking to sell its non-core businesses after it took the government bailout. The sale of the unit is to pay back the $185 billion of government bailout money. Last month MphasiS Ltd acquired the India-based information technology (IT) services and solutions arm of AIG.
The units being sold operate in 32 countries and manage approximately $88.7 billion of investments of institutional and retail clients across a variety of strategies, including private equity, hedge fund of funds, listed equities and fixed income. AIG is retaining its in-house investment operation that oversees approximately $480 billion of assets.
AIG's private equity arm has also been active in India for a long time. Some of its investments include Avasarala Technologies, which manufactures components for nuclear reactors used in the generation of electricity, Firepro Systems (building-systems integrator), Cafe Coffee Day, among others. AIG also has two insurance JVs with India's Tata group - Tata AIG Life and Tata AIG General Insurance.
Earlier Li and Singapore's Temasek were said to be part of the Franklin Templeton Investments consortium. But Franklin later dropped out, which left Religare- Macquarie and New York-based private equity firm Crestview Partners LP in the race. “After conducting an extensive and rigorous auction process, we concluded that this transaction provides fair value for AIG and achieves the greatest long-term stability and potential for the business, its clients, business partners and employees,” said Alain Karaoglan, AIG Senior Vice President - Divestiture.
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