AIG's Corebridge unit falls after stock market debut

AIG's Corebridge unit falls after stock market debut.

Shares in Corebridge Financial, the life and asset management arm of insurance group AIG, slipped in early trading after it completed the largest US initial public offering of the year at the bottom of its target range.

The unenthusiastic reception for the first large IPO since May highlighted investor caution around new listings - even for profitable groups such as Corebridge that are seen as relatively low risk compared with growth-focused start-ups.

AIG's Corebridge unit falls after stock market debut

Shares in Corebridge Financial, the life and asset management arm of insurance group AIG, slipped in early trading after it completed the largest US initial public offering of the year at the bottom of its target range.

The unenthusiastic reception for the first large IPO since May highlighted investor caution around new listings - even for profitable groups such as Corebridge that are seen as relatively low risk compared with growth-focused start-ups.

AIG sold 80 million shares, or 12 percent of the company, at $21 per share, raising $1.7 billion. The deal gave Corebridge an initial market capitalisation of $13.5 billion, 12.5 percent below the top of its target range and 39 percent below the price at which private equity group Blackstone bought a stake last November.

The stock markets have been volatile since Corebridge started its roadshow last week, with the S&P 500 suffering its worst sell-off since June 2020 on Tuesday. However, the index's closing price on Wednesday was 1 percent higher than when the company's target price range was announced.

Corebridge reported revenue of $16 billion in the first six months of 2022 and net income of $6 billion, though the figures were flattered by gains tied to a reinsurer that Corebridge owns a minority stake in. Adjusted return on average equity, the company's preferred measure of profits which excludes the gain from Fortitude, the reinsurer, was 8.1 percent, compared with its target range of 12 to 14 percent.

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AIG sells 80mn shares in Corebridge at $21 apiece.

AIG, which remains Corebridge’s majority owner, sold 80mn shares, or 12 per cent of the company, at $21 per share, raising $1.7bn.

The deal gave Corebridge an initial market capitalisation of $13.5bn, 12.5 per cent below the top of its target range and 39 per cent below the price at which private equity group Blackstone bought a stake last November.

AIG's decision to sell shares in Corebridge at $21 apiece was met with some investor skepticism, as the move valued the company at 12.5% below its original target range. Nevertheless, AIG was able to raise $1.7 billion from the sale of 80 million shares, representing 12% of total ownership. This gives Corebridge an initial market capitalization of $13.5 billion-- still 39% below what private equity group Blackstone paid for its stake just last November.

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Corebridge's stock market debut a test of investor confidence.

The stock market debut of Corebridge is being closely watched as a test of investor confidence in a broader reopening in the IPO market, which has been largely shut for most of the year because of market volatility and economic uncertainty.

It was the first company to raise more than $500mn in a US IPO since Bausch & Lomb’s rocky entry to public markets in May. The healthcare group had been considered a good candidate to reopen the market and lift confidence for further deals, but priced its offering below its target range.

Corebridge's IPO comes at a time when investors are becoming increasingly cautious about new listings, especially in light of the recent stock market volatility. Despite this, Corebridge is seen as a relatively low-risk investment compared to other companies, which may help to boost confidence in the IPO market.

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