Carlyle scores its best profit ever with exit from China's CPIC
After several selldowns of its stake in the last two years, Carlyle will net more than $4 billion profit on the deal, or five times the cash it paid. In private equity terms, a profit of two times cash paid for a gain of several hundred million dollars is considered a successful exit. The Washington, D.C.-based firm is offering 203 million Hong Kong-traded shares of China Pacific Insurance (Group) Co Ltd (CPIC) in a range of HK$30 to HK$30.30 per share, according to a term sheet of the deal seen by Reuters. Carlyle invested about $800 million in CPIC between 2005 and 2007 for a 17 percent stake. The firm began to sell its stake late in 2010, exiting portions of its investment in various chunks, culminating in the current term sheet. Strong demand for insurance products in China coupled with a bull market led to the surge in CPIC's shares.
The firm raised a total of $5.1 billion through its CPIC sales, including the most recent offering. That would put Carlyle's profit from the CPIC deal at $4.3 billion, according to Reuters calculations.
Carlyle's exit of U.S. healthcare company HCR Manorcare is listed at $6.1 billion, but that deal was financed by loans and the gross profit was smaller. Carlyle paid all cash for the CPIC deal.
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