NEW YORK (Bloomberg)—American International Group Inc. dropped a plan to sell a stake in its Asian unit ahead of an initial public offering in November to avoid delaying the sale, two people with knowledge of the matter said.

Potential buyers failed to come up with concrete plans on how to finance the stake of as much as 30% the New York- based insurer sought to sell pre-IPO, the people said, asking not to be identified because the talks were confidential.

Discussions with investors didn't reach the due-diligence stage on AIA Group Ltd. because of different expectations on price, one of the people said.

New York-based AIG, which is selling assets to repay a $182.3 billion bailout by the United States, is planning a Hong Kong offering of AIA after Prudential P.L.C. scrapped its purchase of the unit. A 30% stake would be worth $9.6 billion, based on an earlier estimate of AIA's valuation by Goldman Sachs Group Inc., which was hired to handle the stake sale process.

“AIG is under quite some pressure to repay U.S. debt” after the collapse of the Prudential deal, said Olive Xia, a Shanghai-based analyst at Core Pacific Yamaichi. “Failing to get pre-IPO strategic investors will have some impact on market confidence.”

China Life Insurance Co., China's biggest insurer, and Ping An Insurance Group Co.'s asset management unit were among investors interested in buying a stake in AIA before the IPO, two people familiar with the matter said. Fred Hu, a former Goldman Sachs partner, was trying to put together an investor group to invest in AIA, the people said.

Investor interest

Some of the investors who had shown interest in an AIA stake may be invited to become so-called cornerstone buyers during the IPO process, one of the people said. Cornerstone investors pay the same price as other buyers of an IPO and typically agree not to sell their shares immediately.

China Life Chairman Yang Chao said Thursday it would be “quite difficult” for AIG to reach agreement on pricing with investors before the IPO, citing Hong Kong Stock Exchange rules he didn't specify.

“Whether we'll participate in the IPO depends on the terms,” he told reporters in Beijing.

China Life's board secretary, Liu Yingqi, wasn't immediately available for comment.

Phone calls to Ping An's Shenzhen-based spokesman Sheng Ruisheng's office weren't answered. Mr. Hu couldn't be reached on his mobile phone immediately. Angela Yu, a Beijing-based spokeswoman at Goldman Sachs, and Patricia Chua, a spokeswoman for AIA in Hong Kong, declined to comment.

A stake sold before an IPO usually fetches a discount to the public offer.

‘Open attitude’

Ping An President Louis Cheung said his company has always maintained “an open attitude toward good investment opportunities, no matter it’s participating in an IPO or an equity investment before IPO.” He was responding to a question on media reports about a potential AIA investment during a briefing in Hong Kong on Aug. 25.

AIG last month hired Deutsche Bank A.G., Goldman Sachs and Morgan Stanley to arrange the Hong Kong IPO, three people with knowledge of the plan said at the time. Citigroup Inc. was added to the list later in the month, two of the people said.

Goldman Sachs and Citigroup, both New York based, estimated AIA would be worth $32 billion to $34 billion, while Morgan Stanley estimated the value at $34 billion to $36 billion, people with knowledge of the figures said in June.

London-based Prudential’s $35.5 billion takeover bid for AIA collapsed on June 2 after investors including BlackRock Inc. and Fidelity Investments said the deal was too costly.

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