French insurer AXA is in the early stages of selling its 15% stake in China's Taikang Life Insurance Company, in a deal that could fetch as much as $1 billion, sources said.
The auction of AXA's stake in Taikang underscores how little control over management decisions the French company has at Taikang, according to sources, and comes as Taikang pursues an initial public offering.
Morgan Stanley is advising AXA on the sale of the stake, sources said, with the auction expected to attract several large corporate and private equity suitors. One source with direct knowledge of the matter said the stake is worth between $800 million and $1 billion.
The sources requested not to be named as they were not authorized to speak publicly about the deal.
AXA acquired Switzerland's Winterthur in 2006 and through that deal got the 15% stake in Taikang, according to Chinese media reports.
After years of investments and partnerships in China, some foreign shareholders are reconsidering their strategy as minority shareholders in Chinese firms often have little influence at top management levels.
In early 2007, BNP Paribas decided to end its roughly five-year partnership with China's Changjiang Securities, due to disagreements in business direction between the two parties.
Several US and European banks sold their stakes in Chinese financial groups earlier this year, allowing them to raise cash and exit partnerships that gave them little control.
The Wall Street Journal reported on AXA's plans to sell the 15.6% stake on Wednesday. AXA declined to comment to Reuters after the article was first published. (Reuters)