AIG lines up Asia sale to Invesco

American International Group (AIG) is poised to sell its private equity real estate platform in Asia to Dallas-based Invesco Real Estate.

The embattled insurer, which revealed a $2.4 billion third quarter loss on Friday, is in talks with Invesco as the sole remaining bidder for the platform with a deal possible before the end of the year, according to sources close to the matter.

The sale comes after New York-based AIG recently pledged to repay $20 billion of Federal Reserve Bank of New York money having been kept alive by the US taxpayer in September 2008 with an initial $85 billion bailout.

As part of a mammoth restructuring plan, AIG has announced a raft of money-raising sales and other initiatives in recent weeks. For example, it has disposed of Alico and Delaware American Life Insurance Company to MetLife for $20 billion, raised another $20 billion in an initial public offering of AIA, its Asia insurance business, and agreed terms to sell its Japan-based life insurance subsidiaries, AIG Star and AIG Edison, to Prudential Financial for $4.8 billion.

In addition it has sold SunAmerica’s alternative investments group, which manages hedge funds and private equity fund investments to US investment bank, AllianceBerstein.

Further sales have occurred across its direct real estate holdings including the disposals of a number of its own buildings such as its headquarters in New York and Tokyo.

The Asia private equity real estate platform was put on the block last year, and according to AIG’s own statement in January 2009, it had $12.4 billion of assets under management and $5.2 billion of equity commitments as of September 2008.

AIG and  Invesco declined to comment on talks, however it is clear that should the deal complete it would not only help AIG to further restructure but would also enlarge Invesco’s Asian real estate footprint  alongside its already sizeable US and Europe holdings. Its current Asia real estate business is led by ex-Ayala International executive Cheng-Soon Lau.

Invesco would inherit a number of value-added and opportunity funds, including the AIG Asia Real Estate Partners funds series, the latest of which, AIG Asian Real Estate Partners II, closed on approximately $740 million of equity in September 2008.

The vehicle, which corralled equity from about 20 investors including the San Diego City Employees Retirement Fund and Korea’s National Pension Service, is understood to be its last remaining fund with significant equity to invest.

On the opportunistic front, the platform, led by managing director Graeme Torre, also closed on $100 million for predecessor fund AIG Asian Real Estate Partners in March 2003. In addition to that, it manages a series of three value-added Japanese real estate funds which raised $648 million, $370 million and $185 million respectively between 2002 and 2006. AIG member companies would typically invest 10 percent of the equity in each of its funds.

A deal with Invesco would also represent the latest in a series of consolidations in the Asia private equity real estate market this year following Blackstone’s merger with the principal real estate investments division of Bank of America Merrill Lynch and Apollo Global Management’s acquisition of Citi Property Investors.