(Yicai Global) June 30 -- Multinational insurance giant AIA Group will spend CNY12 billion (USD1.9 billion) to become the second-largest shareholder of an insurance subsidiary of China's postal service operator to expand its business in the mainland.

AIA will buy a nearly 25 percent stake in Beijing-based China Post Life Insurance, the Hong Kong-headquartered buyer said in a statement yesterday.

A deal was expected. In April, China Post Life said it plans to introduce a strategic investor for a 25 percent stake via the Shanghai United Assets and Equity Exchange.

After the transfer is completed, the target company will turn into a joint venture from a state-owned firm. Its registered capital will rise to CNY28.7 billion. The shareholding ratio of its largest shareholder, China Post Group, will drop to 38.2 percent.

The deal will enable AIA to benefit from China Post Life's distribution channels and customer base while seeking opportunities in the Chinese life insurance market, it said.

China Post Life sells most of its products via distribution partner Postal Savings Bank of China. The lender has around 40,000 outlets and more than 600 million retail customers nationwide.

AIA will provide China Post Life with support in product development, science and technology, as well as investment and risk management, it added.

AIA Life Insurance, the buyer's rivaling unit, will remain independent after the acquisition.

AIA's stock price [HKG: 1299] opened up 1.9 percent at HKD97.55 (USD12.60) this morning.

Editor: Tang Shihua, Emmi Laine, Xiao Yi