AIG sell stake in London City Airport

by Gill Montia

Story link: AIG sell stake in London City Airport

American International Group (AIG), the US insurer that was rescued from the brink of collapse by the Federal Reserve in mid-September, has sold its 50% stake in London City airport.

The group purchased London City Airport in 2006 in a joint venture with Global Infrastructure Partners (GIP), an independent fund that invests in infrastructure assets worldwide.

GIP has reported that it will buy AIG’s stake and expects to complete the acquisition next month.

No financial details of the transaction have been reported but analysts expect AIG to make a loss on the sale.

The group is in the process of selling a number of businesses to repay an $85 billion loan from the US Government, having been rescued only two days after the collapse of Lehman Brothers, when it became clear that the failure of the insurer could cause serious damage to global financial markets and world economies.

The US Government took a 79.9% stake in the business in return for pledging up to $85 billion of US taxpayers’ money to give AIG time to plan its recovery.

However, AIG needs to act speedily because interest on the loan is at 8.5% above the three-month London Interbank Offered Rate.