Carlyle portfolio company wins approval for Hong Kong IPO

The Chinese government has allowed Shanghai-listed China Pacific Insurance to list its shares overseas.

China Pacific Insurance, a portfolio company of The Carlyle Group, has received approval from the China Securities Regulatory Commission to list up to 990 million of its shares overseas.

This moves the Shanghai-listed insurer closer to raising at least RMB23.3 billion ($3.4 billion; €2.3 billion) in an initial public offering (IPO) in Hong Kong. The offer price of the company’s H shares will be at least RMB23.5 per share, Wang Xiaogang, an insurance analyst at Shanghai-based Orient Securities told Reuters in July. H shares are shares of Chinese companies trading on the Hong Kong Stock Exchange.

However, China Pacific Insurance still needs approval from the Hong Kong Stock Exchange to list, according to a company statement.

If new shares are issued, Carlyle’s 17 percent stake in the company will be reduced. However, it is unclear if Carlyle will sell shares in the IPO. Carlyle declined to comment.

China Pacific Insurance’s share price rose to RMB25.90 on Wednesday when the news was announced from RMB25.36 the day before. The company's shares are trading at RMB25.38 at press time. The capital raised will be used to scale up its business, the company said.

This is the insurer’s second attempt at a Hong Kong listing. Last year, its plans to raise more than $4 billion in an IPO in Hong Kong were scuppered by weak capital markets.

Carlyle acquired a roughly 24 percent stake in China Pacific Life Insurance, a subsidiary of China Pacific Insurance in December 2005. Before the company was listed on the Shanghai stock exchange, a Carlyle-led consortium made an additional investment into the subsidiary, subsequently exchanging its stake in the subsidiary for a stake of approximately 17 percent in China Pacific Insurance, the parent.

Another Carlyle portfolio company, China Forestry Holdings Group, is planning an IPO in Hong Kong as well. That company is also backed by Swiss alternatives manager Partners Group.

The Chinese forestry plantation operator, which is offering 750 million shares has priced its shares towards the top of its indicative price range of between HK$1.60 ($0.21; €0.14) and HK$2.10, according to a market source. The IPO price is HK$2.07, a source told Reuters

Carlyle has a 16.5 percent stake in China Forestry as well as a board seat while Partners Group has a 7 percent stake in the company.
Presently, Carlyle is in the market with its third Asian buyout fund, having raised a little over $2 billion towards its reported target of about $3 billion. It is also raising its second Asian real estate fund, which is targeting commitments of $1 billion.