Early indications suggest the US Government may struggle to sell down its stake in AIG.

The Government is planning to sell about 15% of its stake in AIG through a $US9 billion ($8.4 billion) public offering, with the sale of 300 million shares (two-thirds of which are owned by the Government) being touted through a nationwide roadshow.

But sources say investors are only interested in about half of the offering. 

The Government needs to achieve a price of $US28.70 ($27.24) or above to make a profit, but AIG’s share price closed on Friday at $US30.42 ($28.87), down $US75c (71c). 

But the smaller offering than had been planned by AIG directors might lead to the markets seeing a “scarcity” factor leading to increased investor demand, while also lifting the offer price to about $US30 a share ($28.87). 

AIG’s profits in the past two quarters have been heavily reliant on proceeds from asset sales, with its commercial insurance arm Chartis announcing a $US4.1 billion ($3.8 billion) hit on prior-year liability reserves at the end of last year.

The Government has owned 92% of AIG since its bailout during the global financial crisis, and is expected to take a huge financial hit on its stake in the group.