AIG to sell US$2.4b of AerCap stock in public offering

[NEW YORK] AerCap Holdings NV said that insurer American International Group Inc plans to sell 50 million shares of the aircraft leasing company in a public offering.

That's 51 per cent of AIG's stake, Netherlands-based AerCap said in a statement Monday, and is valued at about US$2.4 billion, based on the company's closing price of US$48.24. Citigroup Inc and Goldman Sachs Group Inc are leading the offering.

The insurer got the holding as part of its sale last year of International Lease Finance Corp to AerCap for about US$7.6 billion in cash and stock. AIG Chief Executive Officer Peter Hancock and his predecessor Robert Benmosche have been concentrating on global property-casualty coverage and US life and retirement products after the company sold more than US$75 billion in assets to help repay a bailout.

Funds from a share sale will give the insurer "substantial flexibility for capital deployment over time," Jimmy Bhullar, a JPMorgan Chase & Co analyst who covers AIG, said in a Jan 5 research note. "We feel that the stock would react positively if management hints at using the majority of proceeds from potential AerCap sales for share repurchases."

AIG used four underwritten offerings to dispose of shares in Hong Kong-based life insurer AIA Group Ltd, raising about US$35 billion through those sales. The ILFC deal helped AIG get rid of about US$26 billion in liabilities.

AerCap said in a separate statement that it would repurchase US$750 million of its stock from New York-based AIG at the per-share price of the offering. The company will issue $500 million of junior subordinated notes to AIG and pay US$250 million of cash, according to the statement.

AerCap slipped 2.2 per cent to US$47.20 in extended trading at 5.04 pm in New York.

BLOOMBERG