* AIG puts Nan Shan back on sale after initial deal rejected
* Chinatrust, Fubon receive invitation for due diligence
* Cathay Financial, Ruentex chairman also invited
* Due diligence set to end in early December - source (Adds comments, details)
By Faith Hung
TAIPEI, Nov 22 (Reuters) - First-round bids for American International Group Inc's (AIG) Taiwan unit Nan Shan Life are likely shortly after due diligence ends in early December, a source close to the process said on Monday, restarting the bailed-out insurer's much delayed sale of the unit.
The source, who declined to be identified because of the sensitivity of the matter, said four parties would conduct due diligence: Fubon Financial Holdings Co Ltd, Chinatrust Financial Holding Co Ltd, Cathay Financial Holding Co Ltd and the chairman of Ruentex Group bidding as an individual.
AIG is opening the books of Nan Shan after it said earlier this month that it aimed to sell the unit for around $2 billion within two months, in its latest effort to repay its bailout debts to the U.S. government.
In August, Taiwan regulators rejected AIG's plan to sell the unit for $2.15 billion to a Hong Kong-based buyer group of China Strategic Holdings Ltd and Primus Financial, citing concerns about their future ability to raise funds and lack of experience in the insurance business.
The rejection dealt a blow to AIG's plans to sell the assets to repay its bailout, but the successful $20.5 billion IPO of its Asian unit AIA Group Ltd in October eased the pressure.
Fubon Vice-Chairman Richard Tsai told reporters on the sidelines of a business event over the weekend that the company would conduct due diligence.
AIG, Chinatrust and Cathay declined to comment. The chairman of Ruentex Group, better known for its listed retail arm Ruentex Industries Ltd, was not available for comment.
AIG had been widely expected to try to sell the loss-making unit again.
In remarks to Taiwan's parliament on Monday, Financial Supervisory Commission Chairman Chen Yuh-chang said the regulator had suggested that AIG also conduct an IPO for Nan Shan, but AIG did not respond directly to the proposal.
Chen said the commission would stick to the five principles it used to review the Nan Shan bid last time. Those include experience in operating an insurance business and the ability to raise funds in future.
Shares of the companies gained ground on Monday. Chinatrust rose 0.26 percent, Fubon 0.13 percent and Cathay 0.54 percent, respectively, while the broader market rose 1 percent. Ruentex ended flat. ($1=T$30.23) (Additional reporting by Rachel Lee; Editing by Jonathan Standing)