SHANGHAI, Feb 1 (Reuters) - Lifan Group, China's top motorcycle maker, has agreed to sell a stake to U.S insurer AIG , as it prepares for a domestic share sale later this year, two sources familiar with the situation said on Friday.
They did not disclose the financial details of the transaction, which is still pending regulatory approval.
They also declined to give the size of the stake, but Yin Mingsha, owner of Lifan, told Reuters in October of last year that he would sell no more than 20 percent of the firm to outside investors and named AIG as well as private equity firm Texas Pacific Group [TPG.UL] as potential partners.
The Shanghai Securities News reported earlier this week that AIG planned to buy 25 percent of Lifan, but one of the sources said that figure was incorrect and the actual figure was less than 20 percent.
The sources told Reuters that the two sides had closed the deal recently after months of negotiation.
Lifan, which is diversifying into car production, is targeting a domestic share sale this year and plans to raise more than 1 billion yuan ($139 million) to help fund expansion of both motorcycle and car production, the sources said.
Many Chinese firms seeking to list shares publicly sell a stake to a large strategic investor before listing, to boost their appeal to stock market investors.
The firm, whose motorcycles are exported to more than 100 countries, mostly in the developing world, rolled out its first self-developed cars in January 2007 in China and overseas.
It is investing 2.4 billion yuan in phases to boost its car production capacity, which is currently 150,000 units per year. ($1=7.182 Yuan) (Reporting by Fang Yan; Editing by Edmund Klamann)