China's Taikang CEO sees Goldman deal soon

CAPE TOWN (Reuters) - China's Taikang Life Insurance Co said on Saturday a deal by an investing arm of Goldman Sachs (GS.N) to buy AXA's $1.05 billion stake in Taikang was in the final stages of negotiations.

The deal could give Goldman a substantial stake in China's No.4 life insurer and allow France's AXA (AXAF.PA) to shed a non-core asset.

"The negotiations are in the final stages and we expect to make an announcement some time soon," Chen Dongshen, chief executive officer of Taikang Life told Reuters on the sidelines of the Fortune Global Forum conference in Cape Town.

Cheng declined to confirm the price of the deal.

The Chinese authorities will give the acquisition a thorough final check.

He said the deal could give Goldman a key foothold in the fast-growing economy's burgeoning insurance market.

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.

Chen said Taikang Life would list in the next three years as it seeks to expand its market share and position to be the third largest insurer in the country within five years.

"The sooner the better, but probably not tomorrow. Probably in about three years," he said.

Cheng said Taikang Life has about 24 million customers, 60 percent of whom are in the country's cities and 40 percent from the rural areas.

Cheng said this year his company, which he founded 14 years ago, would grow its market share to 10 percent from 8 percent.

Further growth would be unlikely because of the stiff competition in the insurance sector, which has exploded as incomes have improved in the country of some 1.5 billion people.

Chen said he saw new growth of his business driven by demand from the rural areas.

"He who occupies the rural market will be the big winner over the next ten years," Chen told delegates.

"Over the next ten years, our society will change, the rural areas will become even more integrated to the urban areas and differences between the two will diminish gradually."

Cheng said rural dwellers ranked insurance policies as a key must-get item next to cars and houses.

Cheng's company had life insurance policy outlets in most villages, standing side by side with veterinary and stations for giving advice to farmers.

He estimated China's large agrarian rural population at 700 million, and said many of these would be urbanized and drawn into the country's fast-expanding cities over the next ten years, accelerating their incomes and purchasing power.

On investing in China, Cheng said the recipe to success in the vast country was partnering or buying shares in an established market player, rather than going it alone.

"When a foreign company comes in the best way to success is to partner with a big Chinese company, we have seen some examples of companies that have failed going it alone," he said.

(Editing by Ron Askew)