DEALTALK-With AIA IPO back on, underwriter guessing game begins

* AIA’s $15 bln IPO could be biggest in Hong Kong – bankers

* Could generate at least $300 mln in fees

* Unclear whether AIG will appoint new bookrunners
(For more Reuters DEALTALKS, click [DEALTALK/])

By Denny Thomas

HONG KONG, July 16 (BestGrowthStock) – Even before bankers can
finish celebrating the completion of Agricultural Bank of
China’s (601288.SS: )(1288.HK: ) roughly $20 billion offer, they’re
preparing for an invite to another major IPO party — American
International Assurance’s (AIA) resurrected mega float.

Bailed-out insurer American International Group (AIG)
(AIG.N: ) is reviving an IPO for AIA, its Asian life insurance
business, a source told Reuters. That comes after Prudential’s
(PRU.L: ) $35.5 billion takeover bid for AIA collapsed last

One key question is: will AIG keep the same investment
banks they had chosen the first time around? Or will they scrap
that roster, and start anew?

A lot is riding on that question. Not only is global league
table credit at stake — any bank that does AgBank and AIA will
be way, way up there — but also some $300 million in fees is
expected to be on offer.

Bankers said the IPO, which could be completed by year-end,
is targeting raising around $15 billion. [ID:nN14265321]. That
would be the biggest ever IPO done solely in Hong Kong.

Before the IPO formally kicks off, AIA would have to fill
the gaps in its management team as its chief financial officer
and chief legal counsel quit in the midst of the Prudential


For Reuters Insider clip on IPO fees:

For Reuters Insider clip on funding conditions post AgBank:


For now, the main action will still be in New York as AIG
formally announces the IPO and finalizes the underwriting team.

“They will rethink the underwriting process, whether they
will go for another beauty parade is unclear,” a source
familiar with the process, who was not authorised to talk to
the media, said. “Who is going to be on the deal is not on the
top of the agenda. The priority is to get it done quick and

Will AIG choose Credit Suisse (CSGN.VX: ) and J.P. Morgan
(JPM.N: ), which were involved with Britain’s Prudential on the
failed bid for AIA, bankers ask. HSBC (HSBA.L: ) was also
involved, though its equity capital market franchise in Asia is
relatively smaller than the rest of the pack.

Credit Suisse, HSBC and J.P. Morgan declined to comment.


Some bankers expect AIG to run a fresh beauty parade and
name new bookrunners as the previous appointments now look

A lot has happened since AIG named Deutsche Bank (DBKGn.DE: )
and Morgan Stanley (MS.N: ) (Read more about the money market today. ) in June last year as the joint global
coordinators for the AIA IPO.

Earlier this year, when AIA was finally moving towards a
Hong Kong listing, it picked Citigroup (C.N: ), Credit Suisse,
Goldman Sachs (GS.N: ), BofA Merrill Lynch (BAC.N: ), UBS
(UBSN.VX: ), CCB International and ICBC International to
underwrite the deal.

Things got complicated when Prudential launched the bid for
AIA and hired Credit Suisse, HSBC and J.P. Morgan as its
advisers. Credit Suisse was the only bank selected for the AIA
IPO and the Pru bid.

If AIG were to drop or add any underwriters, technically it
does not have to run a new process. Unlike an M&A transaction,
where banks sign an engagement letter with clients, in most
IPOs banks sign an underwriting agreement only when the IPO is

Conventional wisdom holds that bigger the underwriting
team, greater the chances of the success of large IPOs. But as
AgBank’s process showed, the key to large IPOs these days is
securing commitments from cornerstone investors.

That eases the pressure to sell shares to institutional
investors who typically provide support for large IPOs.

The jury is still out on whether AIG will follow the
conventional thinking or travel down AgBank’s route to generate
demand for its offer.
(Editing by Muralikumar Anantharaman)

DEALTALK-With AIA IPO back on, underwriter guessing game begins