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Carlyle eyes historic $4-billion profit from China insurance exit

After several stake sales in the past two years, Carlyle Group will exit its investment in China insurer CPIC with a total profit of more than $4-billion (U.S.), five times the $800-million it invested between 2005 and 2007.


Carlyle Group plans to sell its remaining stake in China's third-largest insurer CPIC (China Pacific Insurance Group) in a deal valued at up to $790-million (U.S.), according to an outline agreement seen by Reuters.

Should the sale succeed, private equity group Carlyle will have exited the business with its largest dollar profit on an investment.

After several stake sales in the past two years, Carlyle will finish with a total profit of more than $4-billion, five times the $800-million it invested in CPIC between 2005 and 2007 for a 17-per-cent stake.

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By private equity standards, where making two times cash paid and a few hundred million is considered a success, the CPIC exit is an historic deal for Carlyle.

Carlyle declined to comment.

The U.S. group, among the world's biggest private equity companies, with more than $157-billion in assets under management, is offering 203 million Hong Kong-traded shares of China Pacific Insurance (Group) Co. Ltd. (CPIC), according to a term sheet seen by Reuters.

Carlyle began selling down its CPIC stake in late 2010, culminating in the current proposal.

Strong demand for insurance products in China through the country's rising middle class, coupled with a bull market, has led to a surge in CPIC's share price. The shares have climbed nearly 40 per cent over the past year, reaching a 52-week high last Thursday.

Carlyle's latest sale, if priced at the top of its range, would take its total proceeds from CPIC share sales to $5.1-billion. That would put Carlyle's profit from the CPIC deal at $4.3-billion, excluding any dividends Carlyle received on its holdings, according to Reuters calculations.

Goldman Sachs Group Inc. and UBS AG have been hired as joint book runners for the sale.

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Carlyle has been investing in Asia for more than a decade and has a portfolio of 38 current investments in Asia, including 19 in China, its website says.

The investment in CPIC was led by X.D. Yang, Hong Kong-based managing director and co-head of Carlyle Asia Partners.

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