Goldman Sachs manages a successful private placement for one of China’s largest insurance companies.
Driven by a burgeoning middle class, insurance companies in China are growing fast. This growth makes them unique, and often desirable, opportunities for investors. But for the China Pacific Insurance Group, the question was, which investors? Specifically, how could they attract investors who were willing to make a substantial investment in the company, with a long-term view.
To achieve this, the company turned to Goldman Sachs, as sole bookrunner and placement agent, to find a group of international investors to purchase 462 million shares.
With strong relationships around the world, the Goldman Sachs team soon focused on three leading sovereign wealth funds: the Government of Singapore Investment Corporation, Norges Bank (the central bank of Norway) and the Abu Dhabi Investment Authority. For the funds – all of them Goldman Sachs clients – it was among the largest investments they ever made in China. For China Pacific, it meant the addition of three very well-known and well-respected investors to the company’s shareholder base.
The $1.3 billion deal, executed in September 2012, was a substantial win for all parties. While China Pacific strengthened its capital base to support future business growth, the investors themselves got precisely what they were looking for: a significant stake in a high-growth business in the largest and most dynamic growth market in the world.
China Pacific’s recent sale of stock – fully managed by Goldman Sachs – stands out as an example of client trust and strong connections to global investors.
A global quest to match capital with the right opportunity
A discussion with the team from
the Investment Banking Division Jian Mei Gan,
Managing Director, Hong Kong Xi Pei,
Vice President, Beijing
Q: Tell us about the firm’s relationship with China Pacific. How did we become the sole bookrunner and placing agent for this transaction?
JMG: China Pacific has been a significant client of Goldman Sachs for some time. In 2009, we led China Pacific’s IPO, and following that, we worked with them on a number of transactions.
Q: So there was already a level of confidence?
JMG: Oh yes – confidence – it facilitated collaboration. So, early last year, we began to contemplate a transaction that would meet their current objectives: first, to raise capital that would help continue to expand their business throughout China and, second, to add high-quality, strategic global investors to their shareholder base.
Q: What made Goldman Sachs particularly well suited to this endeavor?
XP: Among other things, our strong relationships with exactly the kind of investors they were looking for. They also trusted our global team and its ability to work across geographies and divisions to deliver a solution that would be right for the company and potential shareholders alike.
Q: From the perspective of the investors, what made this opportunity important?
JMG: Clearly, the potential growth of the insurance industry here. China is the world’s most populous country and insurance penetration is only about two percent of GDP – very low by Western standards.
Q: So this really was a case of matching needs and opportunities?
XP: It was, absolutely. A big advantage to working with Goldman Sachs is our role as intermediary between companies and investors. We deeply understand the needs of both, and we have the ability to bring those needs and interests together. For China Pacific, these were investors who could provide the capital they needed to grow. For the investors, this was a great opportunity to strengthen their portfolios, and for each of them it was one of the largest investments they had made in China to date.
Q: How is China Pacific putting that capital to work?
JMG: This is one of the most satisfying things about the work we do – not just presenting ideas for transactions, but ideas that solve problems and create opportunities. Our ability to do that doesn’t evolve overnight, or over a couple of days, but over years. It takes getting to know our clients and their businesses, and understanding their goals. It means not just thinking from a financial perspective, but from a business perspective – what clients need to make their businesses better, stronger and more valuable.
Emma Wang, Evan Xu, Chito Jeyarajah,
Wei Wang (all Hong Kong), Investment