Goldman nears deal for AXA's $1 billion Taikang stake

HONG KONG Wed May 12, 2010 8:42am EDT

Related Topics

HONG KONG (Reuters) - An investing arm of Goldman Sachs (GS.N) is in the final stages of an agreement to buy AXA's $1.05 billion stake in Taikang Life, according to sources close to the matter, a deal that could give Goldman a substantial stake in China's No.4 life insurer.

A deal would allow France's AXA (AXAF.PA) to shed a non-core asset, while granting Goldman a piece of China's growing insurance industry.

Several private equity firms, including Kohlberg Kravis Roberts & Co KKR.UL and Blackstone Group (BX.N), competed in the Taikang auction, as did Singapore's Temasek Holdings TEM.UL, sources previously told Reuters.

AXA and Goldman declined to comment.

Like any auction, the deal is subject to last minute changes, and given that it concerns foreign investment, the Chinese authorities will give the acquisition a thorough final check.

AXA acquired Switzerland's Winterthur in 2006 and through that deal gained the stake in Taikang. Sources previously said AXA had little control over management decisions at Taikang and that tensions between AXA and Taikang Chairman and Chief Executive Chen Dongsheng had been growing.

AXA hired Morgan Stanley late last year to handle the auction.

Taikang's total assets are worth $28.12 billion, according to an auction-related document obtained earlier by Reuters. The document also said French insurer AXA's 15.6 stake was worth $1.05 billion and Taikang's 2008 net income reached $247 million.

Chen and his associates owned a combined 14 percent stake in Taikang. Other shareholders include big Chinese state-owned enterprises CITIC Group and Sinopec (0386.HK) (600028.SS) (SNP.N), according to the document.

It goes on to say that Taikang had a 7.9 percent share of China's life insurance market as of 2008, ranking Taikang No.4 behind China Pacific Insurance (Group) Co Ltd (601601.SS), which is partly owned by the U.S. buyout giant Carlyle Group CYL.UL.

Another Singapore investment fund, Government of Singapore Investment Corp GIC.UL, owns 8 percent of Taikang, the document states.

China Life Insurance Co Ltd (601628.SS) is the market leader in the world's most populous country, where the Communist government is increasingly encouraging people to buy insurance as Beijing reforms its healthcare system for the sake of social stability.

(Additional reporting by Lionel Laurent in Paris)

FILED UNDER: