American International Group Inc plans to use an IPO to sell part of its life and retirement business, while Blackstone Group Inc agreed to buy a sizeable stake, according to a person familiar with the matter.

AIG and Blackstone said on Wednesday the private equity firm would pay $2.2 billion in cash for 9.9% of the unit, sending the insurer’s shares more than 6% higher in after-market trading.

AIG had been fielding inquiries from potential investors about taking a 19.9% stake in the life and retirement unit, which sells insurance and annuities, but Chief Executive Officer Peter Zaffino in May said the company would use an IPO to sell the stake instead, dashing the hopes of bidders.

“This does not derail the IPO plan,” the source said.

The moves are part of AIG’s effort to split its life insurance and retirement businesses off from its property and casualty operations, which was announced in 2020, years after activist investors targeted AIG for a break-up.

“(The deal) provides AIG with flexibility as we continue to work to separate Life & Retirement from AIG, and results in significant new capital for AIG to deploy to support our capital management priorities,” Zaffino said in a statement on Wednesday.

Blackstone will also enter a long-term asset management relationship with AIG to manage $50 billion, or about 25%, of life and retirement’s investment portfolio. That amount is due to increase to $92.5 billion over the next six years.

Shares of Blackstone were up 3.6% at $102.25.

Private equity firms, including Blackstone, have been aggressively buying annuity providers, saying they can use their investing prowess to earn better returns on the large pots of money, an important consideration in the current low-interest rate environment. The buyout firms, in return, earn fees for such services.

In a separate agreement also announced on Wednesday, Blackstone Real Estate Income Trust will acquire some of AIG’s affordable housing assets for $5.1 billion, the companies said.

AIG, which has managed the affordable housing portfolio for more than 30 years, said the assets “are no longer core to AIG’s long-term investment strategy.”