Chinese consortium in talks to buy controlling stake in AIG's aircraft leasing unit: report

A consortium led by New China Trust Co is in talks with US insurer American International Group (AIG) to buy a majority stake in its aircraft leasing unit International Lease Finance Corp (ILFC), Bloomberg yesterday reported, citing three people with knowledge of the matter.

The consortium, which includes China's largest bank Industrial and Commercial Bank of China (ICBC) and China Aviation Industry Fund, is bidding for ILFC along with its management, valuing the world's second largest aircraft leasing firm at about $5.5 billion.

The last big deal in the aircraft leasing business was carried out by a consortium led Japan's Sumitomo Mitsui Financial Group Inc (SMFG), which early this year purchased Royal Bank of Scotland's aviation division for about $7.3 billion. (See: Sumitomo Mitsui to acquire RBS's aircraft-leasing business for $7.3 bn)

SMFG won that deal in a fiercely contested auction with China Development Bank Corp, which had submitted a higher bid, but the state-owned Chinese lender took too much time in obtaining final approval from its government.

AIG, once the world's largest insurer, which narrowly missed bankruptcy and was given a more than $180 billion bailout by the US government during the 2008 global financial crisis, had, in September, filed with the US Securities Exchange Commission to spin off 20 per cent of ILFC in an initial public offer (IPO), with plans to sell at least 80 per cent of the company within three years of the IPO.

Early this month, ILFC's CEO Henri Courpron, a former Airbus executive, had said that he does not see an IPO before 2013 since the market is not conducive for a float.