TPG and CNinsure CEO makes MBO bid
TPG CAPITAL WILL PARTNER WITH THE CEO of CNinsure in an effort to takeover the NASDAQ-listed Chinese insurance intermediary, which is party owned by local fund CDH Holdings. The private equity firm and Yinan Hu has offered a bid that represent a 44% premium over the Company’s closing price on May 13. Should the deal proceed, the total value will be around $626 million.
The investor consortium, which has already collected 34.3% of CNinsure's outstanding ordinary shares, has offered cash as payment for acquisition.
According to the company's press statement, the TPG-led consortium comprises of Kingsford Resources Limited, chairman of the Board of Directors and chief executive of CNinsure and entities affiliated with him and special investment purpose company, CDH Inservice Limited, has been expecting to purchase all of the outstanding ordinary shares of the Company, other than certain American Depositary Shares(ADS) or ordinary shares held by the Founder and CDH. Offered price is $19.00 per ADS, or $0.95 per ordinary share, in cash, but that is subject to certain conditions.
The offer is non-binding and is currently being reviewed by other board members, Qiuping Lai, co-founder and Shangzhi Wu, the Director of CNinsure Inc were said reviewing the offer. CDH supremo, Wu, took the board position when CDH made a $18 million expansion investment into CNinsure in December 2005. CDH owns currently 18.8% of the company.
It is also notable that CNinsure executives Hu, Lai and Hu's wife wife have a combined 21.9% stake before this offer.
"This kind of buyout offer is a quite departure from past practices," an industry source told AVCJ, "It is common among Chinese companies to have conflict who actually owns and manages the cmpany. Just investing capital does not mean that the shareholder is actually involved in business operation," She added.
Founded in Guangzhou in 1999, CNinsure distributes a wide variety of property and casualty and life insurance products underwritten by domestic and foreign insurance companies operating in China. About two years later from the incorporation, the company has already attracted private equity players, thus received start up investment from Paul Wolansky owns Cathay Funds. Cathay Funds has since sold its entire shares when CNinsure IPOed in the NASDAQ.
Prior to receive the TPG proposal, CNinsure has sold a 55% stake in its Beijing Fanhua Datong Investment Management life business unit, to Warburg Pincus-controlled Winner Sight Global for a cash consideration of approximately $63.69 million.
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