Bain, Oaktree Said to Team With Local Firm for AIG Taiwan Unit

July 21 (Bloomberg) -- Bain Capital LLC, Morgan Stanley’s private equity unit and Oaktree Capital Management LLC plan to bid together with Chinatrust Financial Holding Co. for American International Group Inc.’s Taiwan unit, three people with knowledge of the matter said.

The companies would bid against Carlyle Group, which is partnering with Fubon Financial Holding Co. for the next round of offers scheduled for late August, the people said, asking not to be identified because the talks are confidential. Morgan Stanley and Blackstone Group LP were hired by AIG to manage the sale.

AIG’s advisers last week asked buyout firms to team up with Fubon, Taiwan’s second-largest publicly traded financial-services company, or Chinatrust, ranked third, to ease regulatory concerns about the sale of the island’s second-biggest insurer to private equity firms. Primus Financial Holdings Ltd. and Cathay Financial Holding Co. have also been invited to put in binding bids next month, the people said.

“The regulator wants the domestic companies to be in the driving seat,” said Chuang Piyen, a Taipei-based analyst at Mega Securities Co. “The buyout firms are likely to be passive investors contributing capital to help the local partner bid.”

Cathay Financial is Taiwan’s largest publicly traded financial-services company. Primus Financial, co-founded by former Citigroup Inc. Asia investment banking chief Robert Morse, has raised more than $1 billion this year.

Morgan Stanley, which owns 4.8 percent of Chinatrust, won approval last month to boost the stake to 9.9 percent through its Asia private equity unit.

Experience in Insurance

The setup of groups bidding for AIG’s Nan Shan Life Insurance Co. unit may change, the people said. Taiwan’s Financial Supervisory Commission has said it wants a buyer of Nan Shan to have experience in insurance.

Nan Shan, the island’s second-biggest life insurer by total premiums, may fetch about $2 billion in the sale, the people said earlier. AIG is aiming to sell assets outside the U.S. to repay loans in a $182.5 billion bailout.

Officials at Bain Capital, Morgan Stanley, Oaktree Capital, Cathay Financial and Primus Financial declined to comment. Sam Lin, a Taipei-based spokesman at Chinatrust, Dorothy Lee, a Hong Kong-based spokeswoman for Carlyle, and Victor Kung, president of Fubon Financial, also declined to comment.

Nan Shan has 4 million policyholders and an 11 percent market share in terms of total premiums. Burdened with unprofitable policies, it raised $1.45 billion in a rights offer last year to avoid slipping below a regulatory capital requirement. AIG owns 97.5 percent of the unit and Nan Shan’s management holds the rest.