CNinsure, a China-based insurance intermediary, has entered into a definitive agreements to sell its 55% equity interest in Beijing Fanhua Datong Investment Management life business unit, to Winner Sight Global, an affiliated entity of Warburg Pincus, for a cash consideration of approximately $63.69m.
In addition, Datong agreed to pay a cash dividend of RMB10m to CNinsure. The transaction was closed on 25 March 2011.
In the fourth quarter of 2008, CNinsure acquired 55% equity interest in Datong for RMB220m. Net revenues and net income derived from Datong for fiscal year 2010 were RMB251.1m and RMB29.7m, respectively, representing 16.9% and 7% of the company’s total net revenues and net income attributable to shareholders, respectively.
Cninsure chairman and CEO Yinan Hu said the the company started the life insurance distribution business by building a life insurance business unit in 2006 and established Datong Life Business Unit in 2008 by acquiring 55% stake in Datong.
"Over the past two years, both of our life insurance business units have achieved astonishing growth. However, the difference in the two business units’ business philosophies and corporate cultures has been increasingly presenting challenges to us in resources allocation.
"Therefore, in order to avoid potential internal friction and streamline our business structure for more effective management and resources allocation, we decided to sell all the equity interest we hold in Datong.
"The sale of Datong will not lead to any change in the growth strategies. Life insurance business remains to be the strategic focus," Hu said.