WASHINGTON The U.S. Treasury Department said on Friday it expects to raise $5 billion from its sale of American International Group (AIG.N) stock, cutting the government's stake in the bailed-out insurer to 55 percent.
The move comes as President Barack Obama's campaign for a second term in which he has been forced to defend his administration's decision to use taxpayer money to prop up companies during the crisis.
The Treasury, which earlier on Friday said it expected to sell $4.5 billion in AIG stock, priced the offering at $30.50 a share. The insurer intends to buy up to $3 billion of the offering.
Treasury said it will sell 163.9 million shares of AIG stock, which will reduce its holding in the insurer to 55 percent from 61 percent.
The insurer received multiple bailouts under both the Obama and Bush administrations, with the government pledging as much as $182 billion in aid.
The Obama administration has been unwinding its position in the politically unpopular financial crisis bailout programs. More than 300 small banks have yet to repay taxpayers.
The U.S. government hired over a dozen financial institutions to help coordinate and run the offering, including Citigroup Inc, Deutsche Bank Securities, Goldman Sachs, JPMorgan Securities, Morgan Stanley and Credit Suisse.
AIG shares closed up 1.62 percent at $31.34 on Friday, over 9 percent above the $28.72 price needed for the U.S. government to break even on its investment in the insurer.
The company is still not overseen by a single regulator and is expected to be slapped with a "systemically important" label from the powerful new U.S. council of regulators. The label would then subject AIG to new rules as well as supervision from the Federal Reserve.
(Reporting by Ben Berkowitz, Lauren Tara LaCapra, Rachelle Younglai; editing by Andrew Hay, Bernard Orr, Gary Crosse)