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NEW YORK (Reuters)—Shares of American International Group Inc. fell 3.6% Wednesday after the insurer and the U.S. Treasury sold $8.7 billion worth of AIG stock.
The Treasury sold 200 million shares, reducing its stake in the company to 77% from 92%, but it still has 1.5 billion shares left to sell to fully exit its investment.
Two and a half years ago, AIG was on the brink of bankruptcy. Now, after government bailouts totaling $182 billion, Washington is beginning to get its money back.
The question is how quickly the Treasury will be able to sell its remaining 1.5 billion shares and whether the investment, overall, will be profitable.
The government did not rescue AIG with the intention of turning a profit but to stem a worsening financial crisis in late 2008.
But so far, the government is in the money: The Tuesday share sale, which included 100 million shares sold by AIG, came at $29 a share, higher than the average price of $28.73 the Treasury needs to break even.
A Treasury official said on Tuesday night that a full accounting would have to wait until the Treasury completes its exit, but he said he was hopeful the government would break even. He said there was no specific timetable for the exit.
AIG shares were down 3.7% at $28.36 in midday trading on the New York Stock Exchange.
There are signs that demand for AIG shares might not be as strong as some originally thought. The Treasury and the company agreed only earlier this month on the size of the Tuesday offering. Banking sources suggested earlier this year that the share sale could be worth $10 billion to $20 billion.
Underwriters on the offering were led by Bank of America Merrill Lynch, Deutsche Bank Securities, Goldman Sachs & Co and JPMorgan.
NEW YORK (Reuters)—The U.S. Treasury does not have any specific timetable or deadline for exiting its investment in American International Group Inc., but will continue to reduce its stake in an orderly manner, a Treasury official said on Tuesday.