Morgan Stanley has won top underwriting role from the Fed of New York to arrange IPO’s of the U.S. insurer American International Group, Inc. (NYSE:AIG) units.
The world’s third-biggest stock underwriter, and adviser of the Federal Reserve on the AIG bailout, will receive money from fees from the IPO’s as well as from other sales of AIG units to buyers. According to Bloomberg, Morgan Stanley will receive an initial $4 million payment and $2.5 million a quarter for its advisory role.
The IPO fees, based on documents Morgan Stanley (NYSE:MS) made available on its Web site, may be the most lucrative part of the banks arrangement. For example, because of AIG’s spin off of AIA, its Asian life insurance unit to be listed in Hong Kong and slated to take place next year, the bank , according to figures disclosed by the New York Fed, may be able to rake in more than $70 million on the units public listing.
The IPO of AIA is expected to raise between $5 billion and $10 billion. Morgan Stanley, as co-global coordinator (Deutsche Bank AG (NYSE:DB) was selected as AIA’s other global coordinator), might get about 36% of that amount.
Morgan, notes Bloomberg, is also entitled to transaction fees if any of 11 major AIG business units are sold. If AIG were to sell its American Life Insurance Co. unit, known as Alico, for $11 billion, Morgan Stanley would earn about $23 million.