Shares in insurance giant AIA jumped by more than three per cent Thursday after reports this week that the company may be looking to buy the Asian insurance operations of ING Group.
A Dow Jones Newswires report valued the potential deal at around 5 billion euro’s (£4.16 billion), well up on the 3.6 billion euro estimate at the start of the week.
Citing unnamed sources, Dow Jones said AIA had asked several banks to conduct a feasibility study but were yet to made a final decision on the purchase.
ING last week gave up efforts to float its Asian and European insurance operations, instead putting the Asian operations up for sale. The company said a tough market in Europe no longer made a combined European-Asian IPO sensible.
The European Commission told ING it would have to sell its global insurance arm in order to win approval for 10 billion euros in state aid received during the financial crisis, the AFP reported.
Last week, ING said it needed more time to repay the aid because it has to protect its capital base amid current market turmoil and, in another sign of worsening conditions, scale down financial targets for its banking unit.
AIA’s Hong Kong share sale was the world’s third-biggest initial public offering at the time.
Some of the cash was earmarked for helping its then parent, troubled US insurer American International Group, pay off a $182 billion US government bailout it received at the height of the global financial crisis.
Once the world’s largest insurer, AIG received the massive government cash injection as it teetered on the brink of collapse in 2008 and threatened to take down a number of large banks with it.
Source – AFP