Sale of stake in Chinese insurer yields $1 billion profit

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Tuesday May 10, 07:50

Sale of stake in Chinese insurer yields $1 billion profit

(by Julia Jenson)

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Sale of stake in Chinese insurer yields $1 billion profit

The sale of stakes in China’s second-largest insurer Ping An Insurance (Group) Co. Will yield $1 billion in profits for Goldman Sachs Group Inc. and Morgan Stanley as they are about to sell a 9.91% stake for $1.04 billion to HSBC Holdings Inc. In 1994 the securities firms paid $35 million each for the stock. This is the single largest profit in China from a private-equity investment.

``China has become not a only a venue to put money into, but one to get a return out of as well,’’ said Paul Mackintosh, managing editor of the Asian Venture Capital Journal.

Private equity firms are rushing to China that was able to attract eight times more in venture capital in 2004 as opposed to 2003, amounting to $1.8 billion. Goldman Sachs raised $8.5 billion making the largest buyout fund on the globe in April will put $3 billion of this fund in Chinese businesses, remembering its success with the Ping An investment.

Ping An had a market share of 15% in 2004. The company;s spokesman said they were grateful to the American firms that helped them improve their performance.

``We are grateful for their long-term support and help in improving the company structure, risk management and management competitiveness,’’ said Sheng Ruisheng, Ping An’s spokesman.

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