TPG Capital's Asian unit sold the remainder of its stake in Ping An Insurance (Group), the mainland's second-biggest insurer, raising HK$9.1 billion, reaping big profits after a six-year investment in the country's financial industry.
Newbridge Capital sold all its 139.1 million H shares at HK$65.30 each, which is 1.5 per cent lower than the last closing price.
The sale was completed the day after Ping An became the biggest shareholder of Shenzhen Development Bank (SDB) with a 52 per cent stake. It was a significant step towards Ping An's goal of becoming a financial conglomerate with business covering insurance, banking and assets management.
Newbridge invested US$145 million to acquire 17 per cent of SDB in 2004 and exchanged that for 299 million shares - or 4 per cent - in Ping An last year. It had raised about US$1.24 billion selling 160 million shares of Ping An four months ago. After clearing the shares of Ping An, TPG earned a combined return of US$2.44 billion - 16 times their investment.
'Although there's still room for Ping An to grow, TPG has made a big enough profit selling its stake,' said Michiya Tomita, a Hong Kong-based fund manager for Mitsubishi UFJ Asset Management. 'It was a very good investment.'
JP Morgan lifted its target price for Ping An to HK$86 from HK$82 and maintained its 'overweight' rating.
It said Ping An had the most profitable life insurance franchise and the market was assigning little value to its other fast-growing businesses.
Ping An Insurance will merge its banking subsidiary, Ping An Bank, with SDB, according to a statement released by the company. The company also said earlier this week that it would further increase its stake in SDB to 62 per cent.
Ping An shifted its focus to the mainland market after losing US$3.3 billion on its 2008 investment in Fortis, which was bailed out by the Dutch and Belgian governments during the credit crisis.
Shares of Ping An Insurance rose 5.45 per cent to close at HK$69.70 yesterday. The stock has been rising continually for two days since trading resumed on September 2.
It had been suspended for two months in July and August due to Ping An Insurance's plan to buy into SDB.