Carlyle eyes $4 billion profit from China insurance exit

HONG KONG Tue Jan 8, 2013 12:11am IST

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HONG KONG (Reuters) - Carlyle Group (CG.O) plans to sell its remaining stake in China's third-largest insurer CPIC in a deal valued at up to $790 million, according to an outline agreement seen by Reuters.

Should the sale succeed, private equity group Carlyle will have exited the business with its largest dollar profit on an investment.

After several stake sales in the past two years, Carlyle will finish with a total profit of more than $4 billion, five times the $800 million it invested in CPIC between 2005 and 2007 for a 17 percent stake.

By private equity standards, where making two times cash paid and a few hundred million is considered a success, the CPIC exit is an historic deal for Carlyle.

Carlyle declined to comment.

The U.S. group, among the world's biggest private equity companies, with more than $157 billion in assets under management, is offering 203 million Hong Kong-traded shares of China Pacific Insurance (Group) Co Ltd (2601.HK) (CPIC) in a range of HK$30 to HK$30.30 per share, according to a term sheet seen by Reuters.

Carlyle began selling down its CPIC stake in late 2010, culminating in the current proposal.

Strong demand for insurance products in China through the country's rising middle class, coupled with a bull market, has led to a surge in CPIC's share price. The shares have climbed nearly 40 percent over the past year, reaching a 52-week high last Thursday.

Carlyle's latest sale, if priced at the top of its range, would take its total proceeds from CPIC share sales to $5.1 billion. That would put Carlyle's profit from the CPIC deal at $4.3 billion, excluding any dividends Carlyle received on its holdings, according to Reuters calculations.

Goldman Sachs (GS.N) and UBS (UBSN.VX) have been hired as joint bookrunners for the sale.

Carlyle has been investing in Asia for over a decade and has a portfolio of 38 current investments in Asia, including 19 in China, its website says.

The investment in CPIC was led by X.D. Yang, Hong Kong-based managing director and co-head of Carlyle Asia Partners.

(Additional reporting by Fiona Lau of IFR; Editing by Michael Flaherty and David Goodman)

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