American International Group's ongoing struggle to pay back its US$167.7 billion government bailout may be set to get a small boost from an unlikely source: strong demand in heavily sanctioned Iran for Chinese-made cars and motorcycles.
AIG, now 80.6 per cent-owned by the US government, is poised to reap tens of millions of dollars in proceeds from the planned Shanghai stock market listing of a small mainland car company doing big business in Iran, according to a South China Morning Post investigation.
For more than a decade, US trade sanction regulations have broadly prohibited American companies and individuals wherever they are located from doing direct or indirect business with Iran. AIG has a minority stake in Chongqing-based Lifan Industry Group, a small, private firm that exports motorcycles to Iran, and also has a licensing agreement with a local Iranian factory to assemble its cars from imported kits.
Lifan, 13.5 per cent-owned by an AIG subsidiary, plans to raise at least 1.48 billion yuan (HK$1.72 billion) in a proposed Shanghai stock market listing that goes before a China Securities Regulatory Commission committee today for a preliminary approval hearing.
'AIG acquired and maintains a non-controlling and minority interest in Lifan,' AIG's New York-based vice-president of media relations, Mark Herr, said yesterday in an e-mailed statement. 'At the time of the investment, Lifan had a de minimis [minimal] amount of sales to Iran. The investment by AIG was not in violation of US law,' the statement said.
Despite AIG's liquidity troubles, which it is also seeking to ease in an up to US$20 billion Hong Kong listing of its Asian insurance arm, AIA, the firm remains a giant of the US insurance and finance industries.