Chinese group in talks to buy AIG air lease arm


A group of Chinese companies, including Industrial and Commercial Bank of China (ICBC), is in talks to buy nearly all of American International Group Inc's (AIG.N) aircraft leasing unit for about $5.5 billion, AIG said on Friday.

The deal is expected to be announced as soon as early next week, a source familiar with the matter said on condition of anonymity.

AIG, which has been selling assets to pay back a $182 billion U.S. government bailout from 2008, had long been hoping to float its ILFC aircraft leasing unit through an initial public offering, but poor market conditions forced it to delay those plans.

An IPO was expected to value the company at $6 billion to $8 billion, according to previous reports on the plans.

AIG Chief Executive Robert Benmosche said last month that he was waiting for markets to improve to take ILFC public.

AIG said it is in talks to sell a 90 percent stake in the unit to a consortium including trust company New China Trust Co Ltd, China Aviation Industrial Fund, and an investment arm of ICBC (1398.HK) (601398.SS), China's largest bank. New China Trust is 20 percent-owned by British bank Barclays Plc (BARC.L).

"The talks are reasonably far along," a second source said.

An ILFC spokesman declined comment.

A spokesman for ICBC declined to comment. Reuters was unable to reach New China Trust and China Aviation.

Shares in AIG rose 2.6 percent to $34.13 on the New York Stock Exchange, after touching their highest level in more than five weeks earlier in the day.

"We view this news positively, since we think a sale of ILFC is the last large transaction AIG needs to do as it continues its turnaround," S&P Capital IQ analyst Cathy Seifert said in a research note.

The capital may come at a good time for AIG. Late Friday, it said it expects after-tax losses of at least $1.3 billion from Superstorm Sandy. It said it would contribute $1 billion to its U.S. property insurance units to help cover the losses.

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