Goldman buys into major Chinese insurer

Goldman Sachs officially acquired its 12.02% stake in Taikang this week, buying its share from French insurance giant AXA for an estimated $925 million, according to the Wall Street Journal. AXA overall took a 15.6% stake in the company in 2006 in conjunction with its acquisition of Swiss insurance group Winterthur from Credit Suisse. In late 2009, AXA put that full stake up for sale, attracting private equity players Blackstone Group and KKR, as well as Goldman Sachs and Singapore sovereign wealth funds Temasek Holdings and the Government of Singapore Investment Corporation (GIC), The latter SWF held an 8% stake in the company at the time. That sales process was stalled due to Mainland regulatory hurdles regarding the ownership of a domestic insurer, but in 2011, AXA has now offloaded its 15.6% share for a reported $1.2 billion - 12.02% to Goldman and the remainder to GIC.

Industry analysts predict that Taikang Life may launch its IPO as early as this year, which may garner up to $4 billion. Taikang is said to be the largest unlisted insurer in the country.

Goldman Sachs has already experienced its share of success in this arena. In June 1994, Goldman's Principal Investment Area and Morgan Stanley Private Equity took a combined 10.1% stake in Ping An Insurance for $35 million apiece. In April 2005, the companies sold the stake to HSBC for HK$8.1 billion ($1 billion), at a 9% premium to its then-trading price. Ping An is now touted as China's second-largest insurance company.

This is the region's second large-scale insurance transaction in so many months. In March, Japan's Nippon Life Insurance took a 26% stake in India's Reliance Life Insurance for $680 million. The deal has been labeled as the largest foreign direct investment in India's insurance space.

The growth of the insurance sector in both China and India have rocketed in recent years with the potential still remaining tremendous. In India, only 10% of India's 1.2 billion population have life insurance, according to The Financial Times, which is certain to grow along with the country's middle class. Meanwhile, the average annual growth of gross premiums issued by insurers in China grew at an average rate of 23.5% between 2000 and 2007, according to the China Insurance Yearbook, with only 2.85% of China's population insured by 2007. A Research and Markets report released last month further notes that life insurance penetration in China is poised to increase at a CAGR of 6.2% between 2009 and 2015.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Financing
• Goldman Sachs