AIG to Sell Asset-Management Unit

By LAVONNE KUYKENDALL Struggling insurer American International Group Inc. has reached an agreement to sell a portion of its investment advisory and asset management businesses for an estimated $500 million. The buyer is Bridge Partners LP, a company owned by Hong Kong private-equity firm Pacific Century Group. AIG announced the deal Saturday. AIG is struggling to repay billions in U.S. government loans, and its new CEO, Robert Benmosche, has said he doesn't want to be rushed into fire-sale prices. The price commanded by the unit, while well below the $800 million proposed in April by some potential buyers, is higher than the $300 million low end of expectations. Much of the final price, however, depends on the unit's performance. In the deal, Bridge Partners will pay $300 million at closing, plus future payments that include a performance note and a continuing share of carried interest. The company estimates that the final price will be approximately $500 million. The transaction, after a long auction process, "provides fair value for AIG," said Alain Karaoglan, AIG's senior vice president of divestiture, in a press release Saturday. The units, known as AIG Investments, operate in 32 countries and manage $88.7 billion of investments for mostly institutional and some retail clients. Investment strategies include private equity, hedge fund of funds, listed equities and fixed income. AIG will retain its in-house asset management unit that manages $480 billion in assets. Win J. Neuger will continue as chief executive officer of businesses being sold and the management team will remain in place, AIG said. The business being sold are part of AIG's asset-management operations, which reported a second-quarter operating loss of $222 million. Until January, Neuger was also AIG's chief investment officer. A person with knowledge of the deal said AIG's sale price is in line with earlier deals. In August, Lincoln National Corp. sold its investment manager, Delaware Investments, to Australia's Macquarie Group for approximately $428 million. Delaware Investments has approximately $125 billion in assets under management. Also in August, Lloyd's Banking Group PLC sold asset manager Insight Investment Management Ltd. to Bank of New York Mellon Corp. for £235 million. AIG said the sale of its asset manager is subject to regulatory and other approvals. AIG has been selling some of its non-core businesses as part of a major restructuring plan to slim down after it was forced to accept billions in government support last autumn. Sales activity may be picking up for AIG. According to a Reuters report Saturday, Taiwan credit card issuer Chinatrust Financial, offered $2.4 billion for AIG's Taiwan Nan Shan Life unit, which has been on the market for months. Benmosche halted the auction of one business last month, AIG Advisor Group, because he said it was core to the insurer's retirement operations. AIG's government bailout, which began in September 2008, has grown to include government support of all types totaling $180 billion at the end of June, AIG has said. Write to Lavonne Kuykendall at lavonne.kuykendall@dowjones.com