UBS buys AIG’s commodity index business

by David Masters

Story link: UBS buys AIG’s commodity index business

AIG Financial Products Corp yesterday reported that it has sold its commodity index business, DJ-AIG, to UBS Investment Bank.

UBS paid $15 million up front for the unit, and will make payments of up to $135 million over the next 18 months, depending on the future earnings of the business.

The sale includes AIG’s rights to the DJ-AIG Commodity Index, and the unit will be renamed Dow Jones-UBS (DJ-UBS).

Thirteen employees from AIG-FP, the unit at the centre of AIG’s huge 2008 losses, will move to join the Swiss Bank.

In January, UBS said it would pay up to $150 million for the acquisition, which will form part of its strategy to overhaul its investment banking division.

“This acquisition allows us to expand our leading equities business in commodities indexes by adding a highly regarded platform, which has considerable market traction, expertise, and critical mass,” said Jason Barron, UBS’s global head of equity derivatives.

“The DJ-AIGCI is one of the most utilised indexes and is a strategic fit with our existing commodity index, the UBS Bloomberg Constant Maturity Commodity Index.”

An AIG-FP spokesperson said the sale was part of an ‘ongoing unwind’ of AIG-FP’s businesses and portfolios.