The US Department of the Treasury has launched an underwritten public offering of $18bn of its American International Group (AIG) common stock, of which AIG is likely to purchase $5bn of the stock at the initial public offering price.

The public offering initiated by Treasury comes after the Federal Reserve Bank disposed its final sale of securities associated in the AIG.

With the proposed sale, the Treasury will offload 529 million AIG outstanding shares, at AIG’s Friday closing price of $33.99 per share, reducing the government’s stake in the underwriter to just more than 20% from 53%, at present.

The Treasury will also grant to the underwriters in the offering a 30-day option to purchase an additional $2.7bn in common stock to cover over-allotments, if any.

Citigroup, Deutsche Bank Securities, Goldman, Sachs & Co, and JP Morgan Securities have been retained as joint global coordinators.

Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital, Morgan Stanley & Co, RBC Capital Markets, UBS Securities, Wells Fargo Securities, Credit Suisse Securities (USA) and Macquarie Capital (USA) have been retained as joint bookrunners for the offering.