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Insurance firm AIG (NYSE: AIG ) announced Sunday that it has agreed to sell up to a 90% stake in its airplane leasing business, International Lease Finance Corp. (ILFC), to a group of Chinese investors. The group, led by New China Trust Co. Ltd.'s Weng Xianding, will purchase 80.1% of ILFC for $4.23 billion, with the option to pick up another 9.9% ownership stake. AIG will retain a minority stake in the company.
ILFC is the largest aircraft leasing firm in China, holding a 30% market share. The deal, expected to close in next year's second quarter, is the largest purchase by Chinese investors in the U.S. -- breaking the former $3 billion mark set in 2007 by China Investment Corp.'s purchase of a stake of Blackstone Group (NYSE: BX ) , Bloomberg reports.
AIG CEO Robert Benmosche explained the rationale of the deal in the press release, saying, "While ILFC is an extremely strong business platform and AIG will retain a minority stake as a passive investor, the aircraft leasing business is not core to our insurance operations. Upon completion, the transaction will have a positive impact on AIG's liquidity and credit profile and will enable us to continue to focus on our core insurance businesses."
AIG is expected to take a $4.4 billion operating loss on the deal, including tax-related charges. ILFC will keep its current CEO and president and will continue to be based out of Los Angeles, but will see the appointment of a new board of directors.