AIG Receives $5.56B From NY Fed Maiden Lane III

AIG Receives $5.56B From NY Fed Maiden Lane III

From the NY Fed’s website:

July 16, 2012: Net proceeds from additional sales of securities in Maiden Lane III LLC enabled the full repayment of American International Group, Inc. (NYSE:AIG)’s equity contribution plus accrued interest and provided residual profits to the New York Fed. The New York Fed will continue to receive 2/3rds of residual profits generated by future sales of ML III LLC assets.

As of 7/12 that was $5.56B:

Capture583 624x279 AIG Receives $5.56B From ML III Sales from NY Fed

I would now expect the Treasury to soon announce another share sale with

American International Group, Inc. (NYSE:AIG) taking most of the offering. At 5B that comes to ~9% of the outstanding shares that will disappear instantly.

That still leaves the ~7B they have coming from the ILFC IPO, 2B from what is left in the ML III portfolio (they get 1/3 of the remaining sales) and ~7B in its stake in AIA Group Ltd (HKG:1299) that will be sold in September. Based on past statements from management, I would expect them to use most, if not all of this to repurchase Treasury shares which means at current prices they can effectively take 35%-40% of the share off the market before Thanksgiving and reduce the gov’t stake to 19% (this assumes AIG buys every share the gov’t offers, the gov’t can easily sell more to shrink their ownership).

I’m not sure we’ve seen such a rapid cap shrink in a 56B company before. That will also push BV from the current $57 to >$70.

By: valueplays