The Hindu Business Line : AIG entering into consumer finance

Kolkata May 2 American International Group (AIG) is stepping into consumer finance in a big way, a decision that is prompting it to explore multiple growth strategies.

The group, which has acquired controlling stake in the Chennai-based Vivek Hire Purchase & Leasing and entered into a deal involving Weizmann Homes, may even look at taking over other existing players in the financial services space.

The AIG plan, said Mr Sunil Mehta, Country Head and Chief Executive, is to launch consumer finance and home loan products and follow these up with auto loans and credit cards.

"Deals, such as the one involving Weizmann Homes, will give us a platform to enter the home loans market. Later, this should help us with our plans to offer personal loans as well," he told newspersons on Wednesday.

The idea is to play a critical role in areas that are clearly showing significant promise, a trend that AIG (which operates internationally in domains as diverse as insurance, aircraft leasing, asset management, hedge funds, real estate and private equity) does not intend to bypass. Investments in Indian infrastructure, incidentally, form a key part of its overall strategy for the country.

The group had earlier set up an Indian sectoral equity fund, which has invested in various classes of infrastructure projects. Its private equity investments too have included emerging domains like telecommunications, it is pointed out.

Real estate investments will in the days ahead account for a significant part of the group's activities. Among its immediate proposals is a 50:50 joint venture with RMZ, a Bangalore-based group, for a large property in Kolkata. It is also looking at development of a 13-acre plot in Chennai.

AIG, Mr Mehta told newspersons, will shore up its employee strength from the current level of 4,500. By end of 2007, it will have over 6,000 employees in India. The group is also scaling up its network to cover more centres, an important consideration in the context of its growth plans in the country.

Eyeing new businesses

AIG, Mr Mehta said, is eyeing certain new businesses, some which it intends to enter this year. These will include investment in distressed assets and mortgage guaranty.

The group, which will continue to explore opportunities in infrastructure investments, expects to work out firmer plans for such operations as asset management. AIG Global Investment Group's first fund will close on May 31.

On the insurance front - AIG has a joint venture with the Tatas - the group hopes to step up its involvement in the venture once existing regulations are amended.