American International Group (AIG) will sell up to a 90% stake in aircraft lessor International Lease Finance Corporation (ILFC) to a consortium of Chinese investors.
The insurance company says it has signed a binding agreement with an investor group, led by New China Trust, China Aviation Industrial Fund and P3 Investments, which will initially acquire an 80.1% stake in ILFC. The deal also includes an option to acquire a further 9.9% stake.
Upon receiving Chinese government approval and exercising the option, another two parties - New China Life Insurance and an investment arm of ICBC International - are expected to join the consortium.
AIG says it intends to retain at least a 10% stake in the business and will act as a passive investor.
The transaction is subject to US and Chinese regulatory approvals and is expected to close in the second quarter of 2013.
AIG says the purchase value of ILFC, which owns a fleet of over 1000 commercial aircraft and has commitments on a further 229, stands at approximately $5.28 billion.
ILFC will retain its chief executive Henri Courpron and president Frederick Cromer and will continue to operate independently from its headquarters in Los Angeles. A new board of directors will, however, be appointed.
Courpron says the acquisition is an "exciting new chapter" for the lessor.
"With existing management remaining in place, the transition will be seamless, allowing ILFC to maintain its focus on delivering the best mix of modern aircraft to meet our customers' needs around the world," he adds.
AIG acquired ILFC in 1990, but had been looking to sell the business as it was not core to AIG's insurance operations.
In 2011, the company made filings to spin off ILFC through an initial public offering, but shelved these plans after it confirmed that it was in talks with investors interested in buying it out.