Private Equity News & Analysis

Report: Primus wins Nan Shan bid

The Hong Kong-based private equity firm reportedly beat a higher bid and will acquire AIG’s Taiwanese unit for $2.2bn.

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Primus Financial Holdings has won the bid for AIG’s Taiwanese insurance unit Nan Shan Life Insurance, with an offer of $2.2 billion, sources told Taiwan’s Economic Daily yesterday.  

Primus says it has not confirmed any deal, declining to comment further.

The firm reportedly beat Taiwanese financial conglomerate Chinatrust Financial even though it submitted a higher bid of approximately $2.3 billion. Private equity firms The Carlyle Group, Bain Capital and MBK Partners were also in the race for Nan Shan at one stage, according to earlier Reuters reports. 

Primus’s bid prevailed as the firm agreed to conditions set by AIG, which included agreeing to guarantee the employees’ pension funds, compensating AIG for its business losses and maintaining the company’s brand and service levels, according to the Taiwanese daily. In an effort to retain employees, Primus and AIG will also each reportedly contribute NT$10 billion ($311 million; €211 million) into a staff fund.  

By contrast, Chinatrust wanted AIG to take up the existing service years of Nan Shan employees’ pensions and the company’s liabilities, which would have offset the higher offer, sources told the newspaper. 

By selling Nan Shan to Primus, AIG would be able to obtain approximately NT$60 billion in cash from the deal after subtracting the NT$10 billion contribution, the sources added. AIG urgently needs capital as it works to pay off about $180 billion in US government bailout money.

In July, Carlyle was in talks with Taiwanese financial services major Fubon Financial to make a joint bid for Nan Shan while Bain Capital was seeking to make a joint bid with Chinatrust Financial, according to various media reports at the time.

There was an emphasis on finding local partners and forming consortiums for the deal as the Taiwanese government was reluctant to let a private equity firm bid for Nan Shan assets on its own. The country’s regulators wanted to prevent any bidder from making a quick profit on the deal and were seeking a long-term commitment to the Taiwanese market, said Reuters at the time. 

Primus was launched this April with initial permanent capital of $1billion from an Asia-based private family. It is the successor organisation of Primus Pacific Partners, an Asian financial services focused private equity firm. This is its first deal in its new entity.