UPDATE 3-Goldman bets on China insurance with $900 mln Taikang stake buy

* Goldman gets exposure to China’s fast-growing insurance
market

* Buys stake from French insurer AXA

* Beats rival bidders KKR, Blackstone and Temasek for stake
buy

(Recasts with analyst quotes, background)

By Denny Thomas and Elzio Barreto

HONG KONG, April 8 (Reuters) – Goldman Sachs has
bought a 12 percent stake worth more than $900 million in
China’s Taikang Life Insurance Co Ltd, giving the Wall Street
giant a foothold into the world’s biggest insurance market.

Goldman’s long-overdue purchase could pave the way for
Taikang’s planned initial public offering next year, bankers and
analysts said, as the insurer seeks more capital to fund its
rapid growth in China.

Credit Suisse estimates China’s life insurance
market –which generated $124 billion premium income in 2009 —
will grow more than 20 percent per annum for the next decade.

But some analysts doubt if Goldman can earn the same big
returns that Carlyle Group and TPG Capital
reaped from their investments in Chinese insurance companies.

“Goldman has come in pretty late into the game relative to
Taikang’s planned IPO timeline, so the returns might not be as
high as previous investors have got,” said Sally Yim, senior
analyst of financial institutions group at Moody’s.

Carlyle’s investment in China Pacific Insurance (Group) Co
is already on course for its best ever exit, after it
sold down a $2.6 billion stake over the past few months.

Last year, TPG sold a $2.4 billion stake in China’s Ping An
Insurance Group Co , which analysts estimate delivered
strong profits for the buyout fund.

RIVAL BIDDERS

Goldman is not new to the China insurance industry, having
previously bought a stake in Ping An along with Morgan Stanley
in 1994. But Goldman is using its balance sheet to buy
the Taikang stake, while the previous investment was made
through its private equity arm.

Goldman acquired the Taikang stake from French insurer AXA
SA , which last month said it agreed to sell its 15.6
percent in Taikang to a group of investors for $1.2 billion.
[ID:nLDE72A1VY]

Goldman beat several bidders, including Kohlberg Kravis
Roberts & Co , Blackstone Group and Singapore’s
Temasek Holdings , to win the Taikang auction.

China Guardian Auctions Co. and New Deal TEDA Investment
Co., Ltd were the others who bought the shares sold by AXA, the
China Insurance Regulatory Commission (CIRC) said on its web
site. AXA put its stake on the block nearly two years ago and
Goldman was picked as the preferred bidder last year.

The stake purchase was approved by CIRC, Goldman and Taikang
said in a joint statement.

Taikang and New China Life Insurance Co. are among insurers
which are looking to tap the public market over the course of
the next year or so. Taikang has about $44 billion in assets and
54 million clients across China.

“The regulators are a bit reluctant to allow insurance
companies to raise subordinate debt to replenish capital. So all
these companies are looking to shareholders to help inject
capital to support growth,” Yim of Moody’s added.

(Editing by Michael Flaherty and Muralikumar Anantharaman)

UPDATE 3-Goldman bets on China insurance with $900 mln Taikang stake buy