enXcoSandi Briner 760-740-7022 ext Copyright Business Wire 2009

enXcoSandi Briner, 760-740-7022 ext Copyright Business Wire 2009. HONG KONG/TAIPEI (Reuters) - Global buyout funds including Bain Capital and Carlyle, which are shortlisted for second-round bids for AIG's Taiwan unit, are in talks with local firms to form rival consortiums to acquire Nan Shan Life, in a deal estimated to be worth over $2 billion, sources said. Deals  |  ChinaPrimus Financial, a new investment firm led by Robert Morse, a former top Citigroup (C.N) banker for Asia, and MBK Partners, a buyout fund founded by former Carlyle dealmakers, have been shortlisted for second-round bids for AIG's (AIG.N) Nan Shan Life, said the sources who were briefed on the progress of the bidding.American International Group, bailed out by the U.S. government in the financial crisis, is selling its Asia assets to shore up its capital base and the sale of Nan Shan could fetch over $2 billion, said the sources.However, Taiwan regulators want that the second-round foreign bidders should choose a local partner to form consortiums to bid for Nan Shan Life, a pre-condition that makes the prospects of the deal more uncertain, they said.U.S. private equity firm Bain Capital is in talks with Chinatrust (2891.TW) for a possible joint bid for Nan Shan, said one source.Bain and Chinatrust Financial Holding Co Ltd have yet to agree on a joint bid, he added."The pre-condition of Taiwan regulators makes the situation much more complicated and uncertain. Even for those who are now going to form a consortium, things may be changed in the third-round or fourth-round bid if regulators ask for more specific restrictions," the source said.SECOND-ROUNDSources in Taiwan also confirmed to Reuters that foreign funds are in talks with local firms to form joint bids but declined to say whether any formal joint bid has been established.Besides Chinatrust, Fubon Financial Holding Co Ltd (2881.TW) also won the right to enter the second-round bid, said the sources. They declined to name who Fubon might partner.Chinatrust is already partly owned by the private equity arm of Morgan Stanley (MS.N), which supports Chinatrust's bid for Nan Shan, said the sources.Separately, Morgan Stanley, which owns nearly 5 percent of Chinatrust, has won approval from Taiwan regulators to raise its stake in Chinatrust to 9.9 percent.The ongoing Nan Shan bid and Morgan Stanley Private Equity's (MSPE) holdings in Chinatrust are two separate cases and MSPE will raise and keep its stake in Chinatrust as planned, said one of the sources.Morgan Stanley and Blackstone Group (BX.N) are advisors for Nan Shan.All the sources declined to be identified as the bidding process is confidential.

Representatives for Bain, Carlyle, Primus, Chinatrust and Fubon all declined to comment. MBK could not be immediately reached for comment.Washington D.C.-based Carlyle Group CYL.UL has long-term experience of insurance investments in Asia.China Pacific Insurance (601601.SS), the No. 3 life insurer in Mainland China, in which Carlyle holds around 17 percent stake, is planning to raise $3.5 billion from a Hong Kong listing, a channel for Carlyle to cash out.(Additional reporting by Kevin Plumberg in HONG KONG and Rachel Lee and Chyen Yee Lee in TAIPEI; Editing by Muralikumar Anantharaman) Deals China. HONG KONG, July 21 (Reuters) - Hong Kong shares inchedhigher in skittish trade Tuesday buoyed by Chinese insurerswhich surged to 14-month highs on investor expectations ofrobust first-half earnings but China-listed shares dropped as abig IPO weighed on the market.

China China State Construction Engineering Corp (CSCEC), theworld's largest initial public offering so far this year, istaking subscriptions on Tuesday and Wednesday. It set a higherthan expected price late on Monday, aiming to raise as much as50.16 billion yuan ($7.3 billion). [ID:nSHA365] Here are the index moves and top stock moves in bothmarkets by midday: HONG KONG * The benchmark Hang Seng Index .HSI was up 0.2 percentat 19,539.83, trimming gains after opening at a 10-month highof 19,601.86, with shares worth HK$45.8 billion changing handsby midday. * The China Enterprises Index .HSCE, which represents toplocally listed mainland Chinese stocks, rose 0.6 percent to11,658.89.

* Chinese insurers extended gains after the industryregulator said on Monday mainland insurance companies may havedoubled their earnings in the first half owing to higherinvestment income and lower funding costs. China Life (2628.HK) rose 2.9 percent while Ping An(2318.HK) gained 3.7 percent Boths stocks hit fresh 14-monthhighs earlier in the session Non-life insurer PICC P&C(2328.HK) gained 4.9 percent. * Shares in the world's largest wireless service providerChina Mobile (0941.HK) dropped 1.6 percent as the company addedfewer new users in June amid competitive pressures. "The market is a little disappointed with the subscribernumbers, but there were other reasons too, such as the downturnin the economy, which affected spending," said Marvin Lo,analyst at Daiwa Institute of Research.