Buyout bodysnatchers

9 October 2009 By John Foley Follow @johnsfoley

A fund founded by a former Citi executive has teamed up with Hong Kong tycoons to bid for AIG s Taiwan business. The tycoons inject cash into an ailing local company, giving Primus a kind of listed sidepocket. It s a neat trick for buyout firms that can find a willing host.

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Primus Financial Holdings, the private equity group set up by Bob Morse, former head of Citigroup's Asian institutional clients group, was tipped to win the auction for AIG's Taiwanese life insurance division, Nanshan, according to local press reports. Primus had offered $2.2bn, said the reports, plus guarantees of further capital for the business.

Primus has teamed up with China Strategic Holdings, a HongKong listed battery maker and investment company, with a market capitalisation of $100m as at the close of trading on October 8. China Strategic would issue convertible bonds worth HK$7.8bn ($1bn) to placees, including various local tycoons, to fund the bid.

Morse would then become vicechairman of China Strategic, which would remain listed on the Hong Kong stock exchange, according to people familiar with the situation. He and fellow Primus founder Ng WingFai would also be on the board of the bid vehicle through which Nanshan would be run.

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