Carlyle exits China Pacific Insurance

Carlyle has fully exited Hong Kong-listed China Pacific Insurance for a return estimated to be close to 6x, according to reports.

The Carlyle Group has fully exited its 2005 investment in China insurance giant China Pacific Insurance (CPIC), a spokeswoman for Carlyle has confirmed. 

“We have been very privileged and proud to be a major shareholder in China Pacific Insurance Group for more than seven years,” said X.D. Yang, co-head of Carlyle Asia Partners. 

“Over these years, we have worked very closely with the company, company management and other shareholders in support of transforming China Pacific into one of the best run and most successful insurance companies in China and a Fortune Global 500 company.”

The exit was the sixth block trade sale of its original 17 percent stake in the company, according to a report from Z-Ben Advisors, which also reported that Carlyle initially invested a total of $800 million in CPIC over two investments in 2005 and 2007.

Carlyle declined to provide financial details of the exit, but a source close to the matter said that CPIC was “one of the most successful exits” Carlyle has done, in terms of returns.

The Z-Ben analysis, however, claims that Carlyle received a total of $5 billion for all six of its trade sale exits, which would mean that this most recent exit would total around $200 million, according to Lillian Zhu, analyst at Z-Ben. If the figures are accurate, that would give Carlyle a more than 6x return over the course of the investment.

CPIC was already listed on the Hong Kong stock exchange, providing Carlyle with an exit advantage in an otherwise very difficult exit market, Zhu said. 

“They were able to find an exit because the company already had shares on the market,” Zhu said. “But if a company is not [already listed] on the market, private equity investors will run into difficulties.”

China’s IPO window is nearly closed. According to a recent China First Capital report, over 800 companies are still waiting for IPO approval from the China Securities and Regulatory Commission – a backlog of almost five years.

Carlyle has $157 billion assets under management worldwide and has made 26 investments in China since 2002, primarily in the consumer & retail and industrial sectors, according to the firm. 

Carlyle’s most recent China investment was a $3.7 billion take-private of Focus Media along with FountainVest Partners and CITIC Capital in December. The deal marks China’s largest ever LBO.