By Agency reporter

Wednesday, 5 Jan 2011

American International Group Incorporated, the insurer that is divesting assets to repay billions of dollars in United States government aid, may be preparing to sell a $510m dollar stake in Blackstone Group LP, a Bloomberg report said on Tuesday.

AIG, based in New York, notified Blackstone earlier this month that it will convert 35.7 million Blackstone partnership units into common shares, according to a Schedule 13G filed December 17 with the US Securities and Exchange Commission. Blackstone common shares, unlike the partnership units, trade on the New York Stock Exchange.

AIG, led by Robert Benmosche, is selling assets to repay a $182.3bn US rescue. AIG reaped a combined $36.7bn by divesting its two largest overseas life-insurance divisions, AIA Group Limited and American Life Insurance Company, the firm said last month.

In September, the insurer agreed to sell two Japanese units for $4.8bn and Benmosche is seeking a buyer for Nan Shan Life Insurance Company of Taiwan.

An AIG spokesman, Mr. Mark Herr and a spokesman for Blackstone, Mr. Peter Rose, declined to comment.

AIG‘s investment in Blackstone dates to July 1998, when the insurer announced that it would pay $150m to acquire a seven per cent stake in the buyout firm, formed by Mr. Peter Peterson and Mr. Stephen Schwarzman in 1985 to provide merger advice. At the time, AIG also committed $1.2bn to Blackstone buyout funds, the first of which was formed in 1987.

In tandem with its June 2007 initial public offering, Blackstone said its existing owners, including Schwarzman and Peterson, would receive about $4.57bn in cash and 847 million units in what are now four holding partnerships for the buyout firm‘s operations. AIG was slated to receive 48.8 million partnership units at the time, according to a prospectus filed with the SEC on June 25, 2007.

The partnership units are exchangeable for common shares on a one-for-one basis. Blackstone had more than 700 million partnership units outstanding as of September 30, according to the firm‘s most recent quarterly report.

AIG in November notified Blackstone that it would exchange 10 million of its partnership units for an equal number of common shares, according to the Schedule 13G filed earlier this month. AIG received the 10 million shares on December 15 and sold them the same day for $13.41 each, or a total of $134.1m, according to a Form 4 filed with the SEC.

On December 9, AIG notified Blackstone that it would exchange the remainder of its stake, consisting of 35.7 million partnership units, for common stock. AIG expects to receive the common shares on February 9, according to the Schedule 13G.

AIG‘s exchange of a combined 45.7 million partnership units will increase the number of Blackstone common shares outstanding by about 18 per cent to 304.3 million, according to the Schedule 13G.

 

Source: Punch