Primus Financial Holdings, founded by former top Citi Asia banker Robert Morse, plans to team up with a Hong Kong-listed battery maker to bid for AIG'sTaiwan unit Nan Shan Life, sources with direct knowledge of the matter said on Thursday.
American International Group, bailed out by the U.S. government in the financial crisis, is selling its Asian assets to shore up its capital base, and the sale of Nan Shan could fetch over $2 billion, sources have told Reuters.
Little-known China Strategic Holdings Ltd, whose major businesses include battery production and securities investments, issued a statement on Wednesday saying it had entered into a non-legally binding agreement with Primus to jointly bid for a controlling stake in an insurance firm.
China Strategic also said it planned to raise about HK$7.8 billion ($1.01 billion)to fund the possible joint acquisition, although it did not name the deal target.
Primus declined to comment, while a representative for China Strategic could not be immediately reached for comment.
The sources declined to be identified as the bidding process is confidential.
Morse, a long-time Citi banker, launched Primus in April after raising $1 billion, aiming to compete with major banks through acquisitions.
Rival bidders included U.S. buyout funds the Carlyle Group CYL.UL and Bain Capital, which had been cleared for the second round of bidding, said the sources.
Taiwan regulators have made choosing a domestic partner a pre-condition for the second round of bidding for Nan Shan Life, expected in late August, said the sources.
Since neither Primus or China Strategic has experience in running insurance firms, it's necessary to have a Taiwan insurer participate in order to meet the criteria set by Taiwan's government, said a source in Taipei.
Primus is in talks with small Taiwan life insurer Hontai to form a joint bid, according to Taiwan media reports, but industry sources have said the alliance would have little chance of winning as Hontai lacks size and market share.
We hope whoever wins the final bid will be committed to running Nan Shan for the long term, said a Taiwan Financial Supervisory Commission official in response to a Reuters inquiry on the Primus-China Strategic bid.
The official declined to be named as he was not authorized to speak to the media.
Bain Capital is in talks with Taiwan's top credit card issuer Chinatrust Financial Holding Co Ltd for a possible joint bid for Nan Shan, while sources said Carlyle may team up with Fubon Financial Holding Co Ltd.
($1=7.749 Hong Kong Dollar)
(Additional reporting by Rachel Lee in Taipei and Fion Li in Hong Kong; Editing by Jonathan Hopfner and Chris Lewis)