Chinese consortium cleared for ILFC deal

US watchdog's initial nod for US$4.3b buy of aircraft leasing firm seen as milestone

PUBLISHED : Saturday, 01 June, 2013, 12:00am
UPDATED : Saturday, 01 June, 2013, 4:46am

The United States' foreigninvestment watchdog has granted initial approval to the sale of International Lease Finance (ILFC) to a consortium of Chinese firms.

The US$4.3 billion deal could be a milestone for US acquisitions by firms from the mainland.

"After a longer-than-expected investigation by the US regulator, we have been informed that they are finally contented with the background of all the shareholders and convinced that the acquisition is made for commercial considerations instead of to promote the influence of the Chinese government," a person involved with the buyers' group said.

The consortium, led by Chongqing-based fund management firm New China Trust and little-known P3 Investment, entered into negotiations in December with insurer American International Group for at least 80 per cent of its stake in its wholly owned aircraft leasing arm.

The buyers' group, which also includes China Aviation Industrial Fund, has an option to purchase 9.9 per cent more. The insurance giant had tried to offload ILFC since the 2008-09 financial crisis. This deal underscores the rising power of rich mainland investors in the global mergers and acquisitions market.

Foreign acquisitions made in the US face political and regulatory hurdles. Topping the list is the Committee on Foreign Investment in the United States (CFIUS), an inter-agency committee that makes assessments on national security.

China Aviation Industrial Fund, which is partly owned by an aviation industrial base controlled by the government of Xian, Shaanxi province, was a concern for CFIUS. A week ago, lawyers for the consortium received verbal approval for the deal from CFIUS. "We expect to receive a formal approval very soon," the person with the buyer's group said.

Weng Dingxing, chairman of New China Trust, bought its forerunner from Industrial and Commercial Bank of China in January 1998. His Shenzhen investment arm owns 71.9 per cent of New China Trust, while British bank Barclays owns 19.5 per cent.

AIG said yesterday it had not received a scheduled deposit for the sale. It was unclear what that meant for the deal.