Carlyle puts HK$6b stake in China Pacific Insurance on the block

PUBLISHED : Tuesday, 08 January, 2013, 12:00am
UPDATED : Tuesday, 08 January, 2013, 4:21am

United States private-equity firm Carlyle is selling its remaining stake in China Pacific Insurance in a block trade that will raise up to HK$6.15 billion. The move comes amid a strong rally in the company's share price in recent weeks.

According to a term sheet obtained by the South China Morning Post, the Washington-based company is offering to sell 203 million shares in the third-largest insurer on the mainland.

The price range is set between HK$30 and HK$30.30, a discount of 3.3 to 2.3 per cent to the yesterday's close of HK$31 after it rose 0.32 per cent.

Shares of China Pacific Insurance have gained 19.3 per cent in the past four weeks, outperforming the stock market's benchmark Hang Seng Index, which climbed 5.1 per cent.

The Shanghai-based insurer surged more than 40 per cent in the past year and reached a 52-week high last Thursday.

After several sell-downs of its stake in the past two years, the US buyout giant is expected to make a net profit of about US$4 billion on the investment it paid, or about four times it had invested, according to sources familiar with the situation.

Yang Xiangdong, a fund manager at Carlyle, handles the investment in China Pacific Insurance.

Brian Zhou, a Beijing-based spokesman at Carlyle, could not be reached for comment.

About seven years ago, Carlyle, one of the world's largest private-equity companies that is controlled by US billionaire David Rubenstein, agreed to buy a stake of about 25 per cent in China Pacific Life Insurance, a unit of Pacific Insurance, for 3.3 billion yuan.

The investment was converted into a stake in the parent company in 2007 and then into a 17 per cent stake in Pacific Insurance's Hong Kong-listed shares in 2009 when the company went public.

Mainland insurers have been the leading outperformers in the stock market over the past month as investors bet an expected bull run will benefit their heavy investment in the A shares. The five major insurers have gained an average 17 per cent over the past four weeks.