Insurance firm AIG (AIG 0.05%) 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 (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.
