Aviva eyes sale of Friends Provident for $500-$700 mln -source

* Draws interest from Chinese firms, European funds

* CEO said unit under review earlier this month

* Deal to add to growing list of Asia insurance M&A

(Adds details on Friends Provident, possible buyers)

HONG KONG, March 28 (Reuters) - Aviva Plc is

exploring a sale of its Friends Provident International unit,

which offers life assurance and investment products, in a deal

that could raise between $500 million and $700 million, a source

with direct knowledge of the matter said.

The British insurer has received preliminary interest from

about half a dozen Chinese firms and European funds for the

business, said the source, declining to be named as the process

was not public.

An Aviva spokeswoman declined to comment.

The news was earlier reported by the Wall Street Journal.

Friends Provident provides life assurance and investment

products to global expatriate and affluent domestic customers in

Hong Kong, Singapore, United Arab Emirates and other selected

markets, according to information available on its website.

The company, domiciled in the Isle of Man, serves over

160,000 customers and employs more than 500 people worldwide.

Aviva, which offers life and general insurance such as motor

and home cover, took control of Friends Provident as part of its

$8.8 billion all-share takeover of rival Friends Life in 2015.

The insurer earlier this month generated a forecast-beating

annual profit, boosted by growth in general insurance and asset

management, and said more of its growing cash pile would be

handed back to shareholders in 2017.

Chief Executive Mark Wilson said at the time that the

Friends Provident business was under review.

According to the Wall Street Journal report, which cited

people familiar with the situation, Chinese conglomerates Fosun

Group and HNA Group were among those evaluating the

Aviva unit. Both companies declined to comment to the newspaper.

The Reuters source said Chinese firms and some European

private equity funds would be the likely bidders for the asset,

though some of the prospective Chinese buyers may be deterred by

Beijing's capital outflow curbs aimed at propping up the yuan.

Chinese insurers have snapped up both domestic and overseas

assets worth billions of dollars over the past two years to

counter falling investment yields, a sharp drop in the yuan

currency and sluggish stock markets at home.

The sale of Aviva's Friends Provident unit, if closed, will

add to the growing list of insurance M&As in Asia.

Last week, First Origin International Ltd, a Hong Kong-based

investment firm, agreed to buy Hong Kong Life Insurance for $914

million.

China's Thaihot Group, a relatively new entrant

to Hong Kong financial circles, in 2016, agreed to buy Dah Sing

Financial's life insurance unit for $1.4 billion in

Hong Kong's most expensive insurance M&A.

(Reporting by Sumeet Chatterjee; Additional reporting by

Carolyn Cohn in LONDON; Editing by Clara Ferreira-Marques, Mark

Potter and Himani Sarkar)