* Company should raise more than $15.4 bln-analyst
* Stock undervalued compared to peers-analyst
* Shares off 16 pct over last four weeks
May 30 Bailed-out insurer AIG should be
able to raise enough capital in the near term to buy out the
U.S. government's remaining 61 percent stake, assuming both the
company and the public share in any stock offering, Sandler
O'Neill analysts said on Wednesday.
In a note to clients, Sandler estimated that AIG would be
able to raise $18.2 billion over the next year. That would be
more than enough, assuming the government's remaining stake is
worth about $30.75 billion and that the U.S. Treasury sells half
of any offering to the company and half to the public.
"AIG has participated in approximately half of each offering
to date, which suggests that AIG needs to find approximately
$15.4 billion to pay off the government's stake," analyst Paul
The money could come from a variety of sources: $7 billion
from AIG's interest in the U.S. Federal Reserve entity Maiden
Lane III, $5.5 billion from selling shares of Asian insurer AIA
, $4.5 billion from retained earnings and roughly $1.2
billion from an initial public offering of plane leasing unit
In the same note, Newsome upgraded AIG shares to "buy,"
citing the stock's recent decline and cheap valuation compared
to peers. AIG trades at just above half of book value, while
other property insurers are trading at book and life insurers
are trading at nearly 80 percent of book.
AIG shares were down 2.2 percent at $29.13 in morning
trading. Since hitting a 13-month high in early May the stock
has shed roughly 16 percent of its value, more than twice the
decline of the Standard & Poor's insurance index.