New China Trust pulls out of bidding for ILFC

PUBLISHED : Thursday, 22 August, 2013, 12:00am
UPDATED : Thursday, 22 August, 2013, 3:09am

New China Trust, which led a Chinese investor group in a US$4.2 billion bid for American International Group's (AIG) aircraft-leasing unit, pulled out of the deal on concern that its ties with a Chinese regulator would prompt added scrutiny, said three people with knowledge of the matter.

New China Trust left the investor group in late May, said one of the people, who asked not to be identified. The consortium had missed three deadlines to complete the purchase of International Lease Finance Corp (ILFC) and AIG retained an option to terminate the deal, a person with knowledge of the matter said this month.

New China Trust's withdrawal had made it more difficult for the bidding group to finance the purchase because it prompted other Chinese investors to pull out as well, one of the people said. The consortium, now led by Hong Kong-based P3 Investments, had raised about US$2.6 billion from five investors in Hong Kong and two in Taiwan, the person said.

The National Development and Reform Commission owned a stake in New China Trust's majority shareholder until last year, company filings show. The NDRC had signalled to the bidding group that New China Trust's presence might give the impression of a conflict of interest because the regulator approved all major overseas acquisitions, two of the people said.

Tim Payne, an external spokesman for the bidding group, declined to comment, as did AIG's Jon Diat. The NDRC and New China Trust could not be reached for comment.

New China Trust's withdrawal came about two months after Xu Shaoshi was appointed chairman of the NDRC.

AIG said in June that it received a delayed deposit for the ILFC purchase. The unit owned or operated a fleet of about 1,000 aircraft by March 31, according to a regulatory filing.