AIG plans to slash the valuation of Corebridge, its life and wealth management business, by more than 30 percent as the spin-off looks to reopen the U.S. market to IPOs with its first major listing since May.
The US insurance group announced on Tuesday that it intends to sell 80 million shares of Corebridge at a price of between $21 and $24 per share and raise between $1.7 billion and $1.9 billion. The company plans to list on the New York Stock Exchange later this month.
Such a price would value the company at $13.5 billion to $15.5 billion, compared to the $22.2 billion valuation it secured last November through an investment by private equity group Blackstone would have.
The discounted price reflects the broader decline in stock prices rather than a significant change in Corebridge’s business.
The S&P 500 stock index has fallen about 15 percent since the Blackstone deal was closed, and shares of recently listed companies have been particularly hard hit. The Renaissance IPO Index is down 44 percent in the first eight months of the year.
The US IPO market has been almost completely frozen since the beginning of the year, and Corebridge’s offering is being closely watched by bankers and private companies to test investors’ appetites ahead of a broader restart.
Corebridge was widely viewed as a prime candidate for the market to reopen, with bankers hoping that its size, history of profitability and backing from its parent company would make it a relatively safe bet compared to the loss-making tech giants that have emerged lately time the IPOs have dominated years.
“It’s a well-known company with a solid business. We believe the time is right and we are confident,” said a person familiar with the process.
Corebridge reported revenue of $16 billion with net income of $6 billion for the first six months of 2022.
Only two companies have raised more than $500 million in U.S. IPOs this year — private equity group TPG in January and healthcare group Bausch & Lomb in May. Bausch was also touted as a strong candidate for the market to reopen, but the price was below its target range and poor performance caused many companies to put their plans on hold for a few more months.
AIG said last month it had postponed Corebridge’s listing because of “high stock market volatility” in May and June.
Peter Zaffino, AIG’s chief executive officer, said when the group reported second-quarter results last month that the deferral gave it time to “solidify the capital structure of this business as a standalone entity.”
AIG has gone through several bouts of restructuring since bailing out taxpayers $185 billion during the 2008 financial crisis, selling businesses in areas from consumer finance to aircraft leasing.
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