Economic ministry denies rejecting Primus bid to buy AIG unit

The ministry on Nov. 13 asked for additional data on the shareholding structure of the buyers, Fan Liang-tung, head of the Investment Commission at the Ministry of Economic Affairs, said by telephone today. Taiwanese regulators are concerned about Hong Kong-based China Strategic Holdings Ltd., which is one of the buyers, using Chinese funding, Fan said.

The U.S. insurer, which is selling assets to pay down loans included in a $182.3 billion U.S. government rescue, on Oct. 13 agreed to sell Nan Shan Life Insurance Co. to a group including Primus and China Strategic. The South China Morning Post today reported that the ministry denied approval, citing people it didn't identify.

China Strategic also denied the SCMP report, saying the Taiwanese regulatory authorities hasn't rejected the application, and that it “remains the intention of the company to have control over Nan Shan, either directly or indirectly,” according to a filing to the Hong Kong stock exchange.

China Strategic shares fell 6.3 percent, the most in three days, in Hong Kong trading as at 2:53 p.m. local time.

Taiwan doesn't allow Chinese investors to take controlling stakes in its industries. The two sides have been ruled separately since Chiang Kai-shek's Kuomintang, or Nationalists, fled to the island after being defeated by Mao Zedong's Communists in 1949. China regards Taiwan as part of its territory.

Increasing Stake

China Strategic on Oct. 17 agreed to sell a 30 percent stake in Nan Shan to Chinatrust Financial Holding Co. for $660 million. China Strategic will in return purchase a 9.95 percent holding in Taipei-based Chinatrust for NT$20.8 billion ($646 million).

Chinatrust has the right to nominate the chief executive officer of Nan Shan after the transaction. The Taipei-based company also agreed to negotiate to increase its shareholding in Nan Shan within three years from the signing of the agreement. China Strategic also may be allowed to lift its stake in Chinatrust in the period.

The approval process has become more complicated with the addition of Chinatrust as the banking regulator needs to get involved, Fan said.

“It is not a rejection, but a request for more complete information on their shareholding structure so we can start reviewing the application,” Fan said. “How can we reject something we haven't even started?”

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