| Will China Pacific Be Carlyle"s Big Jackpot? |
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| Monday, 19 November 2007 08:48 | |
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HONG KONG -- A stepped-up initial public offering of shares by China Pacific Insurance (Group) Co. would make Carlyle Group"s investment one of its most profitable deals ever. China Pacific is increasing the amount of capital it plans to raise in offerings in Shanghai and Hong Kong in the next few months, hoping for between US$4 billion and US$6 billion, people familiar with the offering say. Originally intending to pull in around US$4 billion in the combined offerings, China Pacific has raised those expectations amid a boom in domestically listed Chinese shares, the people say. The IPO furnishes the Washington private-equity firm with a way to cash out of its nearly 20% stake in the Shanghai insurer, which it owns with co-investor Prudential Financial Inc. Carlyle and Prudential acquired about 25% of the Chinese company"s life-insurance unit in 2005 and early this year transferred the stake to the parent company in preparation for the listing. China Pacific expects to sell domestic A-shares in Shanghai sometime before year end, launching an IPO in Hong Kong in the first quarter of next year. Despite recent selloffs in Chinese shares, the Shanghai Composite index is up 99% this year as mainland investors, restricted by capital controls in investing abroad, pump savings into the local stock exchange. Meanwhile, Hong Kong"s Hang Seng index, consisting largely of Chinese companies, has rocketed 38% this year, despite a loss of about 6% over the past month on economic and credit jitters and delays to a program to let mainland investors trade directly in shares listed in Hong Kong. A share sale of this size would be a bonanza for Carlyle. With Prudential, the firm two years ago paid about US$410 million for its initial stake in the life insurer. Since then, the investors have installed new management and pushed China Pacific, China"s third-biggest life insurer by premiums, to position itself with new products appealing to growing numbers of Chinese seeking insurance. Private-equity firms have hit regulatory hurdles in China and struggled to score transactions bigger than US$500 million. Carlyle saw a deal rejected for a minority shareholding in a bank and has faced delays in a plan to buy a big stake in a machinery maker, Xugong Group Construction Machinery Co. Credit Suisse Group and UBS AG are among those underwriting the China Pacific offerings. By LAURA SANTINI November 19, 2007; Page C6 Wall Street Journal Subscribe to Private Equity Watch by Email |