AIA puts flotation on the agenda after Prudential failure

AIA, the Asian arm of America's AIG which Prudential recently failed to buy, looks to be heading towards a flotation.

The board of AIG is meeting this week to consider the future of AIA, with a Hong Kong float seen as the most likely choice. The Pru had to abandon its £25 billion bid under pressure from shareholders, who felt the insurer was overpaying.

Several Chinese groups have reportedly approached AIG about a bid for the unit.

One group is led by Shan Weijian, chairman of the Pacific Alliance Group, the South China Morning Post said, another by Zhang Songqiao, chairman of Hong Kong's CC Land Holdings, and a third by Guo Guangchang, chairman of Shanghai-based Fosun.

The fourth consortium consists of a group of Hong Kong and Taiwanese investors.

All four groups have indicated they have strong support for their bids either from Chinese banks or insurers, the newspaper reported.

"I think this is a big fish that nobody can pass up," said Francis Lun, general manager of Fulbright Securities.

"It's really rare that you get a good, sizeable company like AIA that's profitable. Investors should jump at the chance to snap it up."

Such a deal could prove challenging for any of the parties.

"$35 billion - that's not chicken feed," said Lun. "I think only the biggest banks and insurers like China Life have the resources to do it. You are buying a thing that's several times your size. They would have to raise money in the market, and I don't think investors will react well to that."