AIG finishes buying 13.5% stake in China's Lifan

American International Group completed the acquisition of a 13.5% stake in Chongqing Lifan Industry Group Co. for $90 million.

The purchase was approved by Chinese regulators in June this year, before AIG had become embroiled in financial difficulties in the United States. Lifan said the investment had already been settled, making AIG the second largest shareholder in the group.

Earlier this year, Lifan announced plans to list in the A-share market to raise about 1 billion yuan (108.5 million euros) in China after AIG's capital investment, which will fund the group's product development and overseas expansion. With distribution to more than 100 countries in Europe, North and South America, Asia and Africa, Lifan's total exports were valued at $409.6 million in 2007.

Established in 1992, Lifan is the largest privately-owned Chinese automobile and motorcycle manufacturer in southwestern Chinese city of Chongqing. With 14,068 employees, the car and engine maker earned total revenue of 12.2 billion yuan in 2007 and produced about 3 million power engines, Lifan said.

In China, AIG was the first foreign insurer, with an approved license in 1992. In the wake of AIG's financial crisis, American International Assurance Co. Ltd, AIG's local subsidiary, said the group's life insurance, general insurance and pension services continue to operate normally and remain adequately capitalized to meet obligations to policyholders in China.

Negotiations for the sale of AIG's noncore business units are proceeding in Asia. Interested entities from local and international insurance and financial groups were reported to show interest in negotiations in China.