(Corrects paragraph 7 to show one buyer for ING Swiss assets)
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* AIG, ING fetch top prices for Asia assets
* Other Asia auctions attracting high bids
* Sellers' market climate in Asia underscores bullish
* Scarcity of quality assets also a factor
By Michael Flaherty and Narayanan Somasundaram
HONG KONG, Nov 6 In Asia lately, it pays to be
a seller -- even if you're a company under pressure to offload
an asset or two.
That's not normally the case. Sellers under pressure
typically command lower prices. But a few factors, including
the strong economic environment holding up across Asia, is
turning that rule upside down.
Despite a few bumps in the region's markets, confidence is
up among executives, as are corporate valuations.
"The market for buyers right now is terrible," said the
head of an Asia-focused private equity firm, who did not want
to be named. The reply was tongue-in-cheek, though with a whiff
of real frustration. "There's just a lot of liquidity out here.
Sellers are asking for high prices."
Of all the barometers used to gauge the current strength of
Asia's economic climate, the M&A market shows particularly
bullish signals. Bankers in this business are always bullish,
but the prices paid for some assets sold by what are
technically "distressed sellers" have raised eyebrows.
American International Group (AIG.N), shedding units
globally after a U.S. government bailout, sold its Taiwan life
insurance unit for $2.15 billion last month. Two months
earlier, media reports and sources said the company seemed to
be having a hard time attracting more than $1.5 billion.
A day later, ING Group NV ING.AS, the Dutch financial
group restructuring after its own massive government bailout,
sold its private banking unit in Asia for $1.5 billion --
around 5.8 percent of its assets, or more than double what was
paid for ING's Swiss banking units earlier in the month.
The ING banking sale underscored one the Asian scarcity
factor that bankers and investors point to when considering the
high prices being paid. In an emerging market region, few
opportunities have existed to scoop up an asset like ING's.
And then there's Citigroup (C.N), another bailed out U.S.
financial institution, also selling assets worldwide. Recent
market chatter had indicated the sale of its Japanese
telemarketing group would not generate the price it hoped.
But on Wednesday, Reuters reported that Bain Capital was in
exclusive talks to buy the group, Bellsystem24, for what
sources said could be more than $1 billion -- up to 15 percent
higher than other suitors had offered. [ID:nT162593]
Bankers say the tide has turned faster in sellers' favour
in Asia because of the momentum built after the region survived
the financial crisis largely intact. Where sellers in the
United States and Europe may struggle to generate competitive
auctions, Asia is thriving.
True, M&A volumes in Asia and across the globe are down
from where they were in 2007. But Asia's deal volume has fallen
less dramatically than the United States or Europe.
The region's continued growth potential still makes it a
compelling investment destination for a company or a financial
investor staring at a profit plateau at home.
Look at the auction of Aircel's telecom towers.
Sources say the India-based sale is attracting offers above
the $1.5 billion expected. American Tower (AMT.N), Tata Quippo,
an unlisted firm which counts the Tata conglomerate as a
partner, and GTL Infrastructure (GTLI.BO) are among bidders for
India's last remaining large tower business, sources have said.
"The momentum is shifting to sellers. As long as the
liquidity is sloshing around, sellers, however distressed they
may be, will be in a position to command," a banking source
said. The source did not want to be named as he is not
authorised to speak to the media.
The price paid for ING's Asia banking unit attracted enough
commentary to prompt the buyer Oversea-Chinese Banking Corp
Ltd's (OCBC.SI) CEO to say publicly his bank was not
embarrassed or surprised at the deal value, which it thought
(Editing by Ian Geoghegan)