Tatas open talks to buy out AIG in Indian JVs 23 Oct, 2008 IST,Kausik Datta & Chaitali Chakravarty, ET Bureau
MUMBAI/NEW DELHI: The Tata Group is learnt to have started negotiations to buy AIG’s 26% stake in its Indian life and non-life joint ventures, Tata AIG Life and Tata AIG General, respectively.
Discussions between the parties have gained momentum, with AIG in the process of selling its Asian operations, barring India. Sources close to the development said the Tatas, in all likelihood, enjoy the right of first refusal in case AIG pulls out of these two ventures.
Since inception, these two firms have essentially been run by the foreign partner despite its minority stake. “With the changing dynamics in the global financial markets, the Tatas have made up their mind that they would take a more active role in managing these companies. The proposed acquisition of AIG’s stake is in line with that decision,” the sources added.
The management of Tata AIG’s business in India is in the hands of AIG. The head of the life company, Trevor Bull, is from AIG and the head of non-life Gaurav Garg, was earlier with AIG in New York.
Sources said there is no clarity on the size and timing of the deal. “AIG is unlikely to dictate the price in this transaction for two reasons. One, it needs the deal to happen quickly and two, there are not many suitors,” said a banker.
He said the Tatas may look at diluting their stake in these ventures later, after buying the AIG stake. When asked, a Tata spokesperson said that “there is absolutely no truth” to the information that the Tatas have started negotiations to acquire AIG’s stake in these two ventures.