Business

AIA, the Asian unit of troubled US insurer AIG, has raised $20.5 billion in a Hong Kong share sale that was the world's third-biggest initial public offering, a spokeswoman said Tuesday.

AIA raised $17.8 billion in the sale last month but said at the time the IPO could top $20 billion if

Photo - aia.com

certain options were exercised.

The IPO "raised $20.51 billion after the exercise of the greenshoe option, which brings the total number of shares offered to about 8.08 billion," an AIA spokeswoman told AFP.

In July, Agricultural Bank of China claimed title to the world's biggest IPO with a monster $22.1 billion offering, beating out the previous record set by Industrial and Commercial Bank of China, which raised $21.9 billion in 2006.

AIA shares soared 17 per cent on their debut on Friday, closing at 23.05 Hong Kong dollars compared with a $19.68 IPO price. The shares were trading down 0.2 per cent at 22.95 Hong Kong dollars on Tuesday.

AIA's parent moved to list the Asian unit as part of a plan to repay US taxpayers after receiving a heavily-criticised $182 billion government bailout at the height of the global financial crisis.

Some of those funds are to be recouped from proceeds of the AIA sale, a priority for the embattled Obama administration, which is facing voter anger at mid-term elections Tuesday in the United States.

The US insurer was forced to look at floating AIA in Hong Kong after the collapse in June of a proposed $35.5-billion sale to British insurer Prudential.

Major institutional investors, including the Kuwaiti sovereign wealth fund and several Hong Kong tycoons, snapped up the shares.

Two girlfriends of Hong Kong tycoon Joseph Lau bought a whopping 11.2 billion Hong Kong dollars worth -- half the amount of shares set aside for individual investors -- the English-language Standard newspaper reported last week, citing unnamed sources.

Lau, chairman of property developer Chinese Estates Holdings, denied that the purchases were made on his behalf.

Some observers say AIA is a good bet, pointing to its reach across 15 Asian countries and healthy balance sheet. The insurer booked a net profit of $1.75 billion in 2009.

But others are less convinced, noting that AIA has lost market share in some countries despite being a well-known brand.

"Investors are in Asia for growth. Today’s AIA unfortunately doesn’t measure up too well," Patricia Cheng, analyst at Hong Kong brokerage CLSA, wrote in a report last month.

AIA's "influence has been declining across the board. It’s already lost the top positions in China (among foreign operations), Hong Kong and Singapore."

AIA traces its roots in Asia back more than 90 years and was the first foreign life insurer to operate in China.