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By Denis McMahon and Rick Carew in Hong Kong
French insurer AXA SA (AXA) is looking to raise about $1 billion
from the sale of its stake in China's fourth-largest life insurer,
Taikang Life Insurance Co., according to people familiar with the
situation.
A sale of AXA's 15.6% stake in unlisted Taikang Life would
represent the largest sale of a Chinese insurance asset in a year
when a number of foreign banks have sold off major stakes in the
Chinese financial sector to strengthen their balance sheets.
(This story and related background material will be available on
The Wall Street Journal Web site, WSJ.com.)
AXA could be feeling pressure to sell the stake because of
possible regulatory concern over its investment in two separate
insurance businesses, people involved in the sale process said.
Apart from its stake in Taikang Life, AXA owns a 51% stake in
AXA-Minmetals Assurance Co., a joint venture with China Minmetals
Corp formed in 1999.
The French insurer has hired Morgan Stanley to find a buyer for
the Taikang stake and invited both private-equity firms and
strategic buyers, such as other insurers, to make offers. The
process is still at an early stage.
China's financial-services sector has been lucrative for a
number of major foreign investors, with some generating returns
several times the size of their initial capital investment on their
investments in unlisted banks and insurers.
In June, U.S. private equity firm TPG showed its interest in the
future prospects of China's insurance industry when it offered to
exchange its controlling stake in Shenzhen Development Bank Co. for
a minority stake in Ping An Insurance (Group) Co. of China Ltd.
(2318.HK). TPG has until next year to decide whether to take $1.68
billion in cash for its 17% stake in Shenzhen Development or a 3.9%
stake in Ping An.
AXA inherited the stake in Taikang in 2006 when it agreed to buy
Swiss-based insurance company Winterthur from Credit Suisse Group
for EUR7.9 billion ($11.8 billion).
Beijing-based Taikang Life began operations in 1996 as a
nationwide insurance company founded by its chairman Chen
Dongsheng, who holds a stake in the company. Chen also founded one
of China's most prominent art auction houses, China Guardian
Auctions Co., in 1993. Among Taikang Life's shareholders are many
Chinese state-owned enterprises and Softbank Corp. of Japan.
Taikang Life has flirted with the prospect of an initial public
offering, but appears to have put those plans on hold following the
global financial crisis.
China's insurance industry has been relatively open to foreign
private equity firms, although the amount of capital required to
fund a bid for AXA's stake in Taikang Life could make a deal
difficult for a private-equity buyer.
Morgan Stanley's (MS) private-equity arm and Goldman Sachs Group
Inc. (GS) made early investments in Ping An Insurance. They
generated a huge return by reselling their stakes to HSBC Holdings
PLC (HBC, HSBA.LN).
China's third-largest life insurer, China Pacific Insurance
(Group) Co. (601601.SH), is part-owned by U.S. private equity firm
Carlyle Group. China Pacific is currently listed in Shanghai and
looking to raise additional capital through a listing in Hong
Kong.
-By Denis McMahon, 86 216 1201 200;
denis.mcmahon@dowjones.com
(Rick Carew contributed to this article.)
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