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CDH reaps 4x on exit from US-listed CNinsure

The Chinese private equity firm has sold its interest back to management in a $54m deal

China-focused CDH Investments has sold its shares in NASDAQ-listed Chinese insurance company CNinsure after holding the business for 10 years.

The firm made the investment in CNinsure, one of China’s leading online insurance providers, from its second private equity vehicle, CDH China Growth Capital Fund II.

It is now selling its over 7.7 million shares to company management for $7 per American depositary share or $0.35 per ordinary share in a deal worth $54.1 million, according to a NASDAQ statement.

The firm did not disclose the return information on the deal, but a source close to the matter told Private Equity International CDH reaped around 4x its investment and a 35 percent IRR. 

It is unclear what return the deal has provided for CDH and the firm did not respond to requests for comment by press time. However, the sale represents a full exit for CDH, with company management increasing its stake to 16.6 percent from 3.1 percent.

CDH initially invested in CNinsure in 2005, later teaming up with management and global private equity house TPG Capital in a proposal to privatise the entire business. In May 2011, the consortium offered $19 per American depositary share or $0.95 per ordinary share for all outstanding shares, valuing the company at $951 million at the time.

However, the take-private bid was dropped in September 2011 due to “recent market conditions and near-term volatility”, CNinsure chairman and chief executive officer Yinan Hu said earlier. Hu will remain the largest shareholder after the CDH sale in completed, with 16.8 percent of the business.

CDH Investments is a China-focused private equity firm with as much as $12 billion in assets under management, according to PEI’s Research & Analytics division. The firm was founded in 2002 and invests across asset classes, including private equity, venture capital, real estate and public equity markets in China.