* CCB Asia will buy 100 pct of AIG Finance (Hong Kong) Ltd
* Deal for $70 mln in cash plus repayment of debt
* Key move for CCB as it expands in HK consumer finance
* AIG to sell India IT unit to outsourcing firm MphasiS
* AIG shares rise 4.8 percent to $26.11
(Recasts first paragraph; updates with background, share
By Samuel Shen and Sumeet Chatterjee
SHANGHAI/BANGALORE, Aug 12 American
International Group (AIG.N) has struck deals to sell its Hong
Kong consumer finance and India-based IT services units, taking
two small steps in its bid to raise cash to repay more than $80
billion in bailout loans.
China Construction Bank (CCB) Asia (0939.HK), the country's
second-biggest lender, will buy 100 percent of AIG Finance
(Hong Kong) Ltd for $70 million in cash. The deal also includes
repayment of intragroup indebtedness and deposits of about $557
million, the two companies said on Wednesday.
AIG, once the world's largest insurer, is winding down some
units and selling others to cut risky investments to gain
stability and pay down its debt after being rescued by the U.S.
government during the height of the credit crisis last year.
The company reported its first net profit in seven quarters
last week, and its shares have doubled in value this month. The
stock rose nearly 5 percent on Wednesday.
New York-based AIG said on Tuesday that its financial
products unit had completed the sale of its energy and
infrastructure investment assets, for net proceeds of about
$1.9 billion. [ID:nN11334958]
While a help, sales to date have made only a small dent in
AIG's federal debt, raising concerns that it will still be a
long time before taxpayers are made whole.
On Friday, AIG said that during the first six months of the
year, it had sold assets for net proceeds of about $2.6 billion
that it can use to repay its federal loans.
To help spur bigger sales, AIG has tweaked its divestiture
plans for some of its larger businesses. In recent months it
stepped up plans to list its Asian insurance unit, American
International Assurance Co Ltd (AIA), in Hong Kong after
failing to find a buyer for a large stake in it earlier this
It is pursuing a similar path for its global
property-casualty division. The company is still seeking buyers
for its Taiwan unit, Nan Shan Life.
Buying AIG Finance would help CCB to expand in Hong Kong by
significantly increasing the customer base as well as market
share in the consumer banking market, the Chinese lender said.
AIG Finance, which sells credit cards and operates as a
restricted license bank, has more than 500,000 customers and
employs about 350 people.
Chinese banks including CCB, China Merchants Bank
(600036.SS) (3968.HK) and Industrial and Commercial Bank of
China (ICBC) (1398.HK) (601398.SS) are expanding abroad as
western rivals shrink overseas operations due to the global
INDIA IT SERVICES UNIT
Separately, AIG will sell its Indian IT services arm to
local outsourcing company MphasiS Ltd (MBFL.BO) for an
AIG Systems Solutions Ltd, which provides IT services to
AIG firms globally, has more than 800 staff at its facilities
in Indian cities of Chennai and Kolkata, said MphasiS, which is
owned by Hewlett-Packard's (HPQ.N) Electronic Data Systems Corp
Indian outsourcing companies have been buying local IT
services units of the global financial giants, which are
reeling under the impact of the financial meltdown, to expand
their offerings and acquire new customers.
In December, Wipro Ltd (WIPR.BO), India's third-ranked IT
services firm, announced the acquisition of Citi Technology
Services Ltd for $127 million, as the embattled Citigroup (C.N)
looked to shed assets outside its core business.
Shares of AIG were up 4.8 percent at $26.11 in morning New
York Stock Exchange trading. CCB fell 1.7 percent in a weak
Hong Kong market, while MphasiS gained 0.3 percent in Mumbai.
($1 = 6.832 Yuan=48.4 rupees)
(Additional reporting by Jacqueline Wong and Lilla Zuill in
New York; Editing by Lincoln Feast and Lisa Von Ahn)