U.S. insurer AIG set to purchase 25% stake in Lifan Group

By David Surace


According to an article in Reuters late last week, AIG intends to buy private-equity share in the leading Chinese motorcycle maker, Lifan, whose (rather Mini Cooper-esque) first baby steps in the auto industry were documented on this website late last month.

The owner of Lifan Group, Yin Mingsha, has hinted to Reuters and other sources since last October that the company has sought overseas investorship, specifically naming AIG and Texas Pacific Group as possible partners.

However, he said at the time there was no intention to sell more than 20% of the company. Earlier last week Shanghai Securities News broke the story that AIG planned to buy a full 25%.

The reason? Lifan’s intended automotive expansion away from motorcycle production needs lots and lots of capital, and the company set a goal earlier this year to raise 1 billion yuan through the sale of its shares, or roughly $139 million USD.

The company expects to spend around 2.4 billion yuan ($333 million) long-term to gradually increase its production capacity beyond its current limit of 150,000 vehicles per year. Compared to automakers in America, Europe and Japan, that’s an amazing value for the money, even if we are talking about Mini Cooper knockoffs. The monetary amount of Lifan’s sale to AIG, however, has not been disclosed.

That’s ok; the press release alone was probably worth it. Many Chinese companies seeking to offer public shares will often make juicy private-equity deals beforehand in order to keep their incoming IPO fresh in private investors’ minds.

Here’s hoping that someone at AIG has talked to the Counter Counterfeit Commission before putting pen to paper.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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1 Comment

  1. Very curious. AIG must think the company has a big future.

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