Goldman Sachs 2012 Annual Report Download - page 22

20 Goldman Sachs 2012 Annual Report
“with a significant profit for taxpayers.”
In 2012, American International Group (AIG) completed a series of major transactions that
enabled the U.S. Treasury to monetize its stake at a profit to U.S. taxpayers. Together with
the company’s re-IPO the year before, these transactions represented a full sell-down of
the U.S. Treasury’s 92 percent ownership. Goldman Sachs was the Lead Joint Global
Coordinator for the re-IPO in 2011 and Joint Global Coordinator for four of the five follow-on
offerings in 2012. Through innovative and efficient execution, Goldman Sachs contributed
to accomplishing the plan developed by AIG and the U.S. Treasury to sell shares at an
expeditious pace. The transactions occurred at successively higher prices and each above
the U.S. Treasury’s “breakeven” price. In September 2012, the Goldman Sachs-led
$20.7 billion transaction became the largest-ever U.S. common equity offering.
This monetization was facilitated in part by a series of block trades through which AIG
divested AIA Group Limited of Hong Kong. These offerings followed the successful 2010
IPO of AIA in which Goldman Sachs helped raise approximately $20.5 billion for AIG. In
2012, the firm led three block trades, enabling AIG to sell its remaining 33 percent stake
in AIA and raise, in total, over $14 billion. With the final sale of AIA shares in December 2012,
AIG was able to complete the divestiture of one of its largest non-core assets and complete
yet another step in its restructuring.
Using proceeds from the AIA share sales and its own internal resources, AIG participated
as an investor in the U.S. Treasury’s offerings of AIG stock in the U.S. and bought back
some of its own shares, alongside outside investors drawn by the company’s restructuring
and improving prospects. On December 11, 2012, the U.S. Treasury sold the last of its
AIG shares, with Goldman Sachs helping convert strong investor interest into a significantly
oversubscribed transaction. At year’s end, according to AIG’s calculations, the U.S. taxpayer
had realized a profit of nearly $23 billion from the U.S. Treasury’s AIG investment — and AIG,
once dependent on government support, was a strong enterprise once again.
“At a time when many in D.C. thought the government was going to lose
substantial money on AIG, Goldman worked closely with Treasury and
the company itself on implementing a restructuring plan that ended up
netting billions of dollars in profit for taxpayers.”
James Millstein, Chief Restructuring Officer, U.S. Treasury Department, 2009-2011
Execution
How can an iconic company
complete its turnaround and
repay taxpayer assistance?
AIG repays U.S. government assistance