Carlyle sells final stake in CPIC

Updated: 2013-01-08 23:09

By WU YIYAO in Shanghai and CAI XIAO in Beijing (China Daily)

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Carlyle Group, one of the world's largest private equity firms, has sold its remaining stake in China Pacific Insurance (Group) Co Ltd in a deal valued at $793 million.

Carlyle began selling its stake in the insurer in late 2010. It earned about $4 billion from stock sales over that time, five times the $800 million it had invested between 2005 and 2007 for a 17 percent stake in the Chinese firm, according to calculations by Thomson Reuters.

In 2012, Carlyle's investment in China totaled $700 million with the money coming from five different funds relating to China.

Carlyle did not disclose detailed terms of the deal when it confirmed the sale on Tuesday, but Yang Xiangdong, managing director of the Carlyle Group and co-head of Carlyle Asia Partners, said that it had been very privileged and proud to be a major shareholder in China Pacific Insurance for more than seven years.

"Over these years, we have worked very closely with the company, management team and other shareholders in support of transforming China Pacific into one of the best run and most successful insurance companies in China and a Fortune Global 500 company," said Yang.

The outline agreement on Carlyle Group selling its remaining stake was signed on Monday.

On Tuesday, China Pacific shares were down 2.58 percent in Hong Kong, closing at HK$30.20 ($3.9). Its A-share price was down 2.93 percent in Shanghai, closing at 21 yuan ($3.37).

The prices of China Pacific's Hong Kong-listed shares have climbed nearly 40 percent over the past year, reaching a 52-week high on Jan 4 at HK$31.75.

"While the deal value is large, the drop in the stock price of China Pacific in the H-share market was small, showing that investors are positive about buying shares from Carlyle," said Hong Hao, managing director and chief strategist at the investment banking and securities company BOCOM International Holdings Co Ltd.

Carlyle Group is the second seller that has reached an agreement to exit business with a Chinese insurer in the past two months.

In early December, HSBC Holdings PLC struck a $9.4 billion deal to sell its entire 15.6 percent stake in Ping An Insurance (Group) Co of China Ltd, the world's second-largest life insurer by market value, giving the bank a $2.6 billion profit.

However, the HSBC deal may be in danger as China Development Bank is reconsidering the funding for Thailand's Charoen Pokphand, the buyer of the Ping An Insurance stake, reported Reuters on Tuesday.

Around 20 percent of the holding was transferred to the Thai buyer, a leading agri-industrial group, and the deadline for the rest of the transaction is Feb 1. The deal is subject to approval by the China Insurance Regulatory Commission.

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