Chongqing Lifan Group indicated yesterday it may launch its initial public offering more quickly than previously announced after it teamed up with strategic partner American International Group.

The motorcycle maker has sold a 13.5 percent stake to AIG, the world's leading finance and insurance conglomerate, for US$90 million, sources said. The deal won the go-ahead from the Ministry of Commerce early this month.

AIG will become the second biggest shareholder of Lifan, which is actively expanding its business from motorcycle engines to cars under its own nameplate.

"The investment will be spent on AIG's core business in the future," said Tang Xiaodong, securities representative for Lifan.

The move also helped Chongqing Lifan complete its business restructure, paving the way for listing on the mainland stock market.

Fund raising

Yin Mingshan, chairman of Lifan, said earlier the company may launch its A-share listing this year to raise more than 1 billion yuan (US$147 million) to fund production expansion and enhance engineering strength.

Lifan needs to invest 4.5 billion yuan into its auto industry by 2015 to boost its annual capacity to up to 500,000 units, Yin said.

"Backed by a good strategic partner like AIG, Lifan will gain advantages in building up brand perception before the IPO," said Xia Ping, an auto analyst from Core Pacific Yamaichi International (HK), an investment banking specialist.

"Moreover, the investment injection also appears to be a wise action to help relieve Lifan's dependence on the IPO when the timing is not that good at the moment," he added.

The nearly 50 percent tumble in mainland stock markets has made it harder for auto makers to win IPO approval from the regulatory commission.

That is coupled with a cooling down in the auto market that further shook investors' confidence in the auto industry. Passenger car sales in China rose 17 percent to 3.61 million units for the first half of this year, according to the China association of Automobile Manufacturers.

The growth rate is 5.3 percentage points lower than the 22.3 percent level last year.

(Shanghai Daily July 22, 2008)