Goldman Buys 12% Stake in China Insurer

By and | April 11, 2011

Goldman Sachs has bought a 12.02 percent stake worth more than $900 million in China’s Taikang Life Insurance Co. Ltd, giving the Wall Street giant a foothold into the world’s biggest insurance market.

Goldman’s long-overdue purchase could pave the way for Taikang’s planned initial public offering next year, bankers and analysts say, as the insurer seeks more capital to fund the rapid premium growth in China. Credit Suisse estimates China’s insurance market to grow more than 20 percent per annum for the next decade.

Goldman acquired the stake from French insurer AXA SA , which last month said it agreed to sell its 15.6 percent in Taikang to a group of investors for $1.2 billion.

China Guardian Auctions Co. and New Deal TEDA Investment Co., Ltd were the others who bought the shares sold by AXA, the China Insurance Regulatory Commission (CIRC) said on its web site.

AXA put its stake on the block nearly two years ago and Goldman was picked as the preferred bidder last year.

The stake purchase was approved by CIRC, a joint statement from Goldman and Taikang said.

Taikang and New China Life Insurance Co. are among the insurers now looking to tap the public market over the course of the next year or so. Taikang has about $44 billion in assets and 54 million clients across China.

U.S. buyout funds Carlyle Group and TPG have generated strong returns from their bets on Chinese insurance companies. Carlyle’s investment in China Pacific Insurance (Group) Co. is already on course for its best ever exit, after it raised $2.6 billion.

Last year, TPG sold a $2.4 billion stake in China’s Ping An Insurance Group Co., which analysts estimate delivered strong profit for the buyout fund.

Goldman beat several bidders, including Kohlberg Kravis Roberts & Co., Blackstone Group, and Singapore’s Temasek Holdings, to win the Taikang auction.

(Reporting by Elzio Barreto; Editing by Michael Flaherty and Muralikumar Anantharaman)

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