AIG decides to sell 80% of aircraft leasing unit to Chinese Group

American International Group Inc.

American International Group Inc.

American International Group Inc. informed that it would sell an 80.1 percent stake in its International Lease Finance Corp. to a group of Chinese investors for as much as $4.2 billion. The acquisition is expected to be the China’s biggest purchases of an American company. What is more, the group of Chinese investors has an option to buy an extra stake of 9.9 percent, which would give them as much as a 90 percent stake in ILFC.

Acquisition of AIG’s plane leasing unit

The Chinese investor group, which consists of inter alia New China Trust, China Aviation Industrial Fund and P3 Investments Ltd., is to acquire over 80 percent of AIG’s International Lease Finance Corp. for as much as $4.2 billion. The group has also an option to purchase additional stock of almost 10 percent. The acquisition of AIG’s International Lease Finance Corp. is estimated to be the biggest Chinese-U.S. transaction since 2007 when Blackstone Group LP was bought.

AIG plan to keep at least 10 percent of International Lease Finance Corp. after the transaction closes. The finalization of the deal is expected in the second quarter of 2013. The acquisition of AIG’s plane leasing unit needs however authorization from regulatory authorities. Certainly the transaction will be closely checked by U.S. authorities including the Committee on Foreign Investment as the acquisition of AIG’s International Lease Finance Corp. would be one of the China’s biggest purchases of an American company. The group of Chinese investors also has to wait for the approval from the China’s regulatory authorities. If the acquisition with the option to pay more than $1 billion for another 9.9 percent is granted authorization, New China Life Insurance and an investment arm of ICBC will join the group of Chinese investors.

The acquisition of AIG’s International Lease Finance Corp., the company that leases over 1,000 planes to airlines and other clients in 80 countries, is certainly an ideal way for China, the world’s second economy, to improve the air travel infrastructure and its fleet as well.

As it was underlined by top officials, the company would continue to be fronted by both CEO Henri Courpron as CEO and President Frederick Cromer remaining on their posts. The company, which hires almost 500 people in the U.S., will remain as an American corporation and be listed with the American authority – the Securities and Exchange Commission. After the finalization of the acquisition of AIG’s International Lease Finance Corp., the new board will be appointed. According to the statement, AIG CEO Robert Benmosche will be included as one of the members of the new board.

AIG sells off

AIG Inc., an American multinational insurance corporation, has been selling off its subsidiaries to be able to buy off the government loan of  over $180 billion since it received the bailout back in 2008. The sale of International Lease Finance Corp. is in line with company’s strategy which is aimed at selling AIG’s non-core businesses in order to turn the corner.

According to AIG CEO Robert Benmosche, new owners want ILFC to expand in emerging markets in Asia, Latin America and the Middle East as well. As it was underlined by him the sale would help the company to concentrate mainly on two operations, namely, worldwide property-casualty coverage and American life insurance.

Richard Meryn
Richard Meryn, Associate Editor Industry Leaders Magazine (www.industryleadersmagazine.com)

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