JSM Financial: U.S. Treasury says an IPO may be an option if Prudential’s bid for AIA fails.

May 27, 2010 - PRLog -- JSM Financial has learned that Jim Millstein, a chief restructuring officer with the U.S. Treasury has told reports that American International Group (AIG) had prepared the paper work in Hong Kong for an IPO for shares of AIA but at the last minute chose instead to go with the Prudential Plc deal.

Prudential stockholders, many of whom are set against the AIA acquisition, are due to vote on the $35.5 billion cash and stock deal on June 7 with a 75% in favor result needed to secure the transaction.

"If the shareholders of Prudential in their infinite wisdom determine this is not where they want to go, then the company (AIG) will have a very viable alternative to go back to the IPO,"  JSM Financial believes Jim Millstein told reporters after a recent bailout oversight panel hearing.

As a result of federal bailouts in late 2008 and 2009 due to the global financial meltdown the U.S. Treasury currently owns about 80% of AIG’s common equity.

AS previously reported by JSM Financial, Prudential’s shareholders have been lobbied by shareholder advisor RiskMetrics Group Inc to reject the deal which would see the firm become an behemoth in the Asian sector because  the agreed price would require very high growth rates to secure a reasonable return.

Millstein went on to say that while the Treasury was not actively lobbying Prudential shareholders to vote in favour of the merger it was in favour of the deal as it would  be a positive move for the U.S taxpayers where the Treasury would be receiving Prudential share as part of the deal.

"This is going to become a real powerhouse in Asia," JSM Financial believes he added during the interview. "We'll see whether the Pru shareholders agree. They may just want to just stay owners of a UK insurance company with a small little operation in Asia rather than being the largest pan-Asian life insurer."

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