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Carlyle closes on China Pacific deal

Carlyle Group, the Washington DC-based buyout house, is close to acquiring a 25 percent stake in China Pacific Life Insurance for around $400m.

The Financial Times reported that Carlyle Group, the US-based private equity firm, is to acquire around 25 percent of China Pacific Life Insurance, China’s third-largest life assurance business, for about $400 million (€298 million). Carlyle Group declined to comment.   

The report added that the deal would represent the largest private equity transaction so far seen in China. Last month, the Wall Street Journal reported that Carlyle Group had emerged as the front-runner to acquire 80 percent of Xuzhou Construction Machinery Group for up to $400 million, in what would be China’s first leveraged buyout.

Carlyle Group has pledged to invest up to $1 billion in China by 2006, highlighting increasing interest from foreign private equity groups in accessing the fast-growing Chinese economy. According to Dealogic, China has recorded 22 private equity deals worth a total of more than $900 million so far in 2004, compared with just four deals worth $37 million in 2002.

China Pacific has an 11 percent share of the Chinese life assurance market, which is expected to see strong growth as the population grows wealthier and the government increasingly reduces its provision of social benefits. The company has 180,000 exclusive agents and is forecast to report premium income of about $3 billion this year. However, its balance sheet is still burdened with loss-making policies written during a period of falling interest rates in the late 1980s and early 1990s.