Primus Financial Holdings is very confident it will get approval from Taiwan's regulators for its bid to buy AIG's Taiwan insurance unit, a top executive from the investment firm said on Tuesday.
Primus' co-chief executive Wing-fai Ng told Reuters in an interview that it planned to list Nan Shan Life in Taiwan in three years if it won the bid, and then in Hong Kong and the United States, which would turn Nan Shan into a global brand.
Primus, founded by former top Citi (C.N) Asia banker Robert Morse, is in the final bidding race with the Carlyle Group CYL.UL and Bain Capital for a deal estimated at about $2 billion for Nan Shan, the most expensive asset for sale in Asia of American International Group.
Primus has teamed up with Hong Kong battery maker China Strategic (0235.HK), raising concern from some analysts that the joint bid will not be approved by Taiwan regulators, who could decide they are not be interested in making a long-term commitment to run Nan Shan and could be backed by mainland Chinese investors.
However, Ng said in an interview in Taipei: We are very confident we'll be approved. We have no China shareholder money.
Self-ruled Taiwan has opened some industrial sectors to mainland China investment, but the island is keen not to include its financial sector amid national security concerns.
Primus is among four buyer groups selected by AIG, once the biggest U.S. insurer until it was bailed out by the U.S. government last year, to enter the final bidding round, which sources have said is due by Friday.
Carlyle has paired with Taiwan's Fubon Financial (2881.TW), Bain Capital has teamed up with Chinatrust Financial (2891.TW), while Cathay Financial (2882.TW), Taiwan's top listed financial holding firm, is bidding on its own.
Hong Kong-based Primus would invest $500 million into Nan Shan and keep its staff, Taiwan's No.2 sales force with 38,000 agents, if it won the bid, said Ng, a former managing director of Fubon Financial, parent of Taiwan's No.2 life insurer.
The $2 billion price tag, widely seen as too high, and growing pension disputes with Nan Shan's union could once again sink AIG's plan to sell Nan Shan after an attempted sale was scuppered earlier this year, sources in Taipei and Hong Kong have said.
More ideally, AIG could sell Nan Shan for $1.2 billion-$1.3 billion as it could record losses in 2009 and 2010, after reporting a loss of T$46.7 billion ($1.4 billion) in 2008, said a source with direct knowledge of the deal. The source declined to be identified as the bidding process is confidential.
The bid underscores the efforts of Primus, a new $1 billion investment firm, to build an insurance platform across Asia.
From an investment return point of view, it does not make sense to invest in Taiwan. Taiwan's financial industry is the least profitable in Asia, Ng said in Taipei.
Bob (Robert Morse) is desperate to build an aircraft -- a pan-Asia group. We plan to use Nan Shan as a base and expand to Hong Kong, Malaysia and Japan, said the co-chief executive.
In April when the firm was launched, Morse told Reuters that he hoped Primus someday can compete against major banks like Citigroup, Morse's former long-time employer.
(Editing by Chris Lewis)