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AIG Buys Lifan Group Stake to Tap China Motorcycle, Auto Demand

Beijing, 220708. American International Group Inc., the world's biggest insurer by assets, bought a stake in Chongqing Lifan Group Co. because of China's surging sales of motorcycles and vehicles.

AIG Asian Opportunity Fund II LP and other AIG funds made the investment, the New York-based insurer said in an e-mailed statement yesterday, without providing details. The company paid $90 million, according to a statement posted on Lifan's web site, which didn't say how big a stake AIG bought.

The investment is being made as China's 10 percent economic growth rate has turned it into the world's fastest growing major auto market. Lifan, China's biggest motorcycle exporter, will gain funding for new products, including cars, and for its plan to build factories overseas.

Lifan, based in the southern city on Chongqing, aims to raise 4.5 billion yuan ($660 million) by 2015 through share sales, bank loans and commercial bills, Chairman Yin Ming Shan said in June last year. The company started making compact cars in 2006 with a model named the 520.

Vehicle sales in China jumped 19 percent in the first half of this year to 5.18 million units. That compares with a 10 percent slump in the U.S., the world's biggest auto market.

AIG's investment was approved by China's commerce ministry on June 13, according to Lifan's statement.

Source: Bloomberg.com.