AIG IPO: How to Do Due Diligence?

It’s the due diligence that matters. And the bona fides of the seller. Those are two key determining items in any initial public offering. The thing about offering the public shares in AIG is this: Who will do the due diligence, and who will attest for the merits of the business?

Since the U.S. government owns the business, and is taking US$25 billion in pref shares in the New Cos, it isn’t clear who one complains to if you get sold a bill of goods. And whatever IPO shares you buy are junior to those owned by the Feds.

As for the due diligence, that falls to the investment bankers on Wall Street. The ones who buy and sell swaps and credit default derivatives amongst each other, and were prime beneficiaries of AIG’s original government bailout. Which means that it won’t be easy to find underwriters who are not already connected to AIG (AIG) in a business fashion.

The silver lining may be this: if AIG can IPO some of its divisions, the global equity markets are clearly finding their footing.

Comments

[kirkf:]

Not necessarily. How often do you get a chance to invest in a business that can never fail?

Jun 26 07:09 PM

[User 441859:]

Shareholder meeting results in 20-for-1 reverse split! Thank you Obama and the Feds for fu**ing me on this one.

Jul 06 07:34 PM