AIG Weighing Minsheng Stake
American International Group (AIG), one of the world's
largest insurance groups, is considering investing in
Minsheng Bank, China's only privately held bank. Current
talks are focused on buying 5 percent of Minsheng Bank.
If the deal goes through, AIG
would become a "strategic investor" in Minsheng
Bank. In 2003, AIG had also acted as a "strategic
investor" in the IPO of PICC,
China's largest property insurer. Unlike Minsheng Bank,
PICC was a state-owned enterprise which is now transforming
into a listed share-issuing company.
The deal would cost about US$250 million for AIG. Minsheng
plans to have its IPO in the second quarter of this year.
The advisers for both sides are Citigroup, Deutsche Bank
and Goldman Sachs.
It already has operations in eight Chinese cities, but
is under considerable pressure from other foreign insurance
companies who want a piece of the action.
Minsheng Bank has branches in 16 Chinese cities, and
an alliance would help AIG to offer its insurance products
through Minsheng's branches.
Minsheng has a very good reputation for quality and service
in China, but this has lately been marred by the revelation
it faked a shareholders' meeting in 2000. It has assets
of 361 billion yuan (US$44 billion).
Headed by Maurice Greenberg, AIG has been aggressively
expanding its presence in the China market, and has taken
positions in insurance-related business in the China market.
The company has always had a strong Asia presence, and
partnered with Nanshan Insurance in Taiwan in the seventies,
getting experience and exposure to a Chinese speaking
retail market. While this is mainly for business reasons,
there are historical reasons as well, since AIG was founded
in Shanghai in 1919, and did business in China until 1949,
the year of the founding of the Peoples' Republic. It
was given a license to reopen in Shanghai in 1993.
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