PE firms may bid for AIG assests

American International Group Inc, the insurer forced to sell assets to repay a US loan, may reap as much as $1.7 billion for a division that manages money for clients, with private-equity firms among the likely bidders.

AIG this month offered for sale the unit with about $114 billion under management and hired UBS AG to handle the auction, said a person with knowledge of the matter who declined to be identified because the talks are private. The division could fetch about 1.5 percent of assets under management, said Michael Kim, an analyst at Sandler O'Neill & Partners in New York. Buyout firms including Carlyle Group and TPG Inc have been on the prowl for asset managers in the past year, as financial companies liquidate units. Bain Capital LLC and Hellman & Friedman LLC submitted a joint bid for bankrupt Lehman Brothers Holdings Inc's unit, only to be topped in December by an offer of about $1 billion from the fund's executives.

Private-equity firms "still have some capacity" for asset- manager acquisitions, Kim said in a Jan 12 interview. "I don't think you're going to see any big bank or broker buying it just because of the constraints they're under." Banks and other financial firms have announced about $1 trillion of writedowns and credit losses amid a global financial crisis sparked by the collapse of the US mortgage market, according to data compiled by Bloomberg.