AIG to raise up to $6.5 billion through AIA share sale: source

American International Group Inc (AIG) may raise up to $6.5 billion through the sale of its remaining stake in Asian insurer AIA, a source said on Monday, marking AIG's total exit from a company it has held a stake in for nearly 100 years.

The source, who has direct knowledge of the matter, told Reuters that AIG would sell the 13.69 percent, or 1.65 billion block of shares, in the range of HK$29.65-HK$30.65 per share. AIA's stock closed at HK$31.65 on Friday.

The source declined to be identified as the price range was not yet public.

AIG expects to use the net proceeds from the AIA <1299.HK> sale for general corporate purposes. AIG said earlier on Monday that it had commenced a sale of its AIA shares in Hong Kong by placing them to certain institutional investors. The company did not disclose the buyers or the price.

After selling $2.02 billion in AIA shares in September, AIG was barred from selling any further shares until December 10.

AIA, Asia's third-largest insurer, was spun out of AIG in October 2010, with AIG Chief Executive Robert Benmosche overseeing the company's listing in Hong Kong after a failed takeover offer from Prudential Plc .

AIA has built a sprawling and successful business across the region, with an army of hundreds of thousands of agents competing head-to-head with Prudential in several countries.

AIA moved to split off from AIG after the U.S. company nearly collapsed in the wake of the 2008 financial crisis, prompting a U.S. government bailout of $182 billion.

(Reporting by Michael Flaherty; Editing by Ryan Woo)