Photo: Michael Dalder Photo: Michael Dalder
Hong Kong - Allianz SE struck a deal with Goldman Sachs to help the German company hedge part of its stake in China Pacific Insurance Group (CPIC) and lock in profits from two rounds of investments that Allianz made in China's third-largest insurer.
Under the deal, Allianz agreed to a future sale of 147.7 million Hong Kong-traded shares of CPIC at HK$36.77 each to Goldman in a $700 million transaction. That price is equivalent to a 4.2 percent discount to CPIC's closing price on Wednesday.
Through that transaction, Allianz gets to hold on to its stake in CPIC for now while locking in profits from an investment in 2009 and another stake purchase in 2011. CPIC shares are up 31.3 percent from when Allianz made its first investment and up 18 percent from the time of the second purchase.
Separately, the deal means Goldman took a long position on CPIC, and to offset that, the New York-based bank sold 147.7 million CPIC shares at HK$36.77 each late on Wednesday, according to a term sheet of the deal seen by Reuters on Thursday.
Goldman declined to comment on the transaction. Allianz didn't immediately respond to a Reuters request for comment.
The deal is similar to a hedge Goldman entered in 2011 with American Express Inc under which American Express effectively set up a short position in Industrial and Commercial Bank of China Ltd to offset part of its long-term investment in the Chinese bank.
Allianz, Europe's largest insurer, first bought into CPIC in December 2009, when it was a cornerstone investor in the Chinese company's Hong Kong listing with a $150 million purchase.
Allianz increased its stake further in January 2011, buying $855 million worth of shares from private equity firm Carlyle Group.
Allianz currently owns 243.2 million CPIC shares, according to Hong Kong stock exchange data.
CPIC's stock is up 51 percent over the past year, but it has undergone wild swings since the beginning of 2015. At one point, CPIC's shares rose more than 17 percent over five days, only to go down 11 percent in the following five days.
CPIC shares were down 1.8 percent in early afternoon trading on Thursday.
Goldman acted as sole bookrunner for the transaction.
Reuters