American International Group Inc. , the insurer majority-owned by the U.S. Treasury, has started the process of publicly listing its airline leasing unit, as it seeks to wind down its 21-year involvement in the business.
Papers filed with the Securities and Exchange Commission on Friday will pave the way for the initial public offering of International Lease Finance Corp., the second-largest aircraft lessor in the world in terms of fleet value.
"While AIG has not made a final decision to pursue an IPO, this filing is an important step to help us prepare for one, should that be the decision," said Henri Courpron, chief executive of ILFC, in a note to employees. He added that an IPO was a chance for AIG to "capitalize" on its ownership of ILFC.
ILFC has 933 aircraft in its fleets, but potentially more attractive to investors is the order book of 236 new aircraft, worth $17.6-billion (U.S.), which is expected to be delivered in the period to 2019.
The filing did not divulge the number of shares ILFC, based in Los Angeles, would be offering or at what price, but it is understood that 20 per cent of AIG's holdings would be offered, with none of the proceeds going to IFLC.
AIG said it would try to dispose of another 80 per cent in the three years subsequent to it going public.
This is the latest move by AIG in its effort to sell part or all of ILFC, after the insurer was bailed out by the U.S. Treasury at the height of the financial crisis. The aircraft leasing company has been among the assets AIG has tried to dispose of after the U.S. Treasury took a majority stake in the company at a cost estimated to be $182.3-billion.
Volatility in global markets has not put off AIG, as the IPO process will probably take a number of months. The typical time from initial filings with the SEC to pricing is three months, giving the company time to assess the economic environment at a later date.
However, in May, Air Lease Corp., a rival company set up by a group of former ILFC executives, went public, but its shares have fallen by 20 per cent in the period since. The IPO market in the U.S. has been relatively buoyant in 2011, with 155 companies raising $34.4-billion so far, according to data collected by Dealogic. That comprises 23.3 per cent of all the money raised by IPOs globally.