NEW YORK (AP) – American International Group Inc. is cashing in on Blackstone Group LP's initial public offering, according to a Goldman Sachs analyst.
The New York-based insurer invested $150 million in Blackstone Group in 1998, and Goldman analyst Thomas V. Cholnoky said in a note to clients that based on his calculations, that stake could be worth $1.9 billion to $2.1 billion.
Blackstone, a private equity firm, priced its IPO Thursday night at $31 per share, the high end of its underwriters' range. Blackstone's owners will receive almost $4 billion in cash plus stock in the new company.
Cholnoky estimates AIG will collect 10 percent to 12 percent of the cash and 48.8 million shares of a publicly traded Blackstone.
Cholnoky said its difficult to estimate the actual book value of the investment because of AIG's limited disclosure about it, but he noted that if the initial $150 million had increased threefold, it would add $1 billion to $1.1 billion to AIG's book value, after taxes. Book value, or the net value of a company's assets, is a common way for investors to determine what insurance companies are worth.
Cholnoky said his estimates are conservative, and AIG's take would increase if the shares do well in the open market.
Shares of AIG fell 41 cents to $71.64, and Blackstone shares rose 4.75, or 15.3 percent, to $35.75 in morning trading.