The competition for American International Group's Taiwan unit has heated up after Bain Capital and Oaktree Capital Management announced they were joining forces with Chinatrust Holding, according to Bloomberg.

The three bidders will reveal the partnership when the next round of offers emerge in late August this year, the news service said.

AIG, which has been bailed out by the US government after sustaining massive losses, has been selling off parts of its businesses in recent months. AIG Private Bank is now owned by Abu Dhabi-based Aabar Investments. Aabar Investments acquired AIG private bank in December of last year.

Bloomberg said the group bidding for the Taiwan unit will be bidding against another consortium, comprising Carlyle Group and Fubon Financial Holding.

The sources, who declined to be named, also said that Cathay Financial Holding and Primus Financial Holdings have been invited to place their bids.

Last week, AIG advisors urged buyout companies to tie up with either Fubon or Chinatrust, two of the island's largest financial services firms, to ease regulatory issues on the sale of Taiwan's second-biggest insurer.

The sale is being managed by Blackstone Group and Morgan Stanley.