The giant insurer American International Group has chosen four banks to be joint global coordinators of its expected secondary offering: Bank of America, Deutsche Bank, Goldman Sachs, and JPMorgan Chase, according to people familiar with the matter.
The four banks—who will lead a hotly-anticipated deal that could range from $10 billion to $30 billion in size—will all have key roles, these people say, although a more nuanced pecking order will be established in the coming weeks. An initial “organizational meeting” will be held tomorrow to work out some additional details, one of these people added.
Fees for the offering are likely to settle out at about 50 basis points—a level considerably below a typical deal fee and even lower than the 75 basis points paid out for the recent General Motors IPO, the people familiar with the matter said.
Banks have been engaged in a delicate horse race to lead the gargantuan offering for much of the past week. On Thursday, at a law office in New York, some of the Street’s best-known chief executives, including JPMorgan’s Jamie Dimon and Morgan Stanley’s James Gorman, accompanied teams of bankers and capital-markets experts to pitch AIG and its biggest shareholder, the U.S. Treasury, as part of the deal’s bake-off.
AIG had decision-making power in the process, said one of the people familiar with the matter, but Treasury had the right to veto underwriters. In the case of the four banks selected, this person said, there was no disagreement.
JPMorgan, which people close to the matter say impressed government officials with its handling of the GM offering—another deal that involved a large Treasury selldown—doesn’t come as a surprise. Nor does Bank of America , which has advised AIG through much of the past year.
The selection of both Goldman and Deutsche Bank , however, has raised some eyebrows—Goldman, partly because of an embarrassing Securities and Exchange Commission law suit that alleged violations of investor-disclosure laws last year, and Deutsche because it isn’t a U.S. bank.
But one of the people familiar with the matter said that Goldman’s suit, which was settled for $550 million, played no role, and that AIG officials were impressed with Goldman’s handling of the IPO of AIA, AIG’s Asian arm, last year.
Deutsche Bank, this person added, was chosen largely because it can provide an enviably large network of institutional investors in Europe and Asia—contacts AIG will need if it hopes to offload tens of billions of dollars in shares to a new contingent of mutual funds, pension funds, and sovereign-wealth funds.