HONG KONG (Bloomberg) — China will let Carlyle Group, a Washington DC-based buyout firm, buy a 19.9 percent stake in China Pacific Insurance (Group) Co., paving way for the insurer's first share sale.Carlyle and Newark, New Jersey-based Prudential Financial Inc., which form the investing group, will be required to hold their stakes for three years, the China Insurance Regulatory Commission said in a statement on Friday. The regulator didn't say how much the investors will pay.

The approval marks the completion of Carlyle's almost three-year effort to invest in China's third-largest insurer, giving China Pacific funds to plug a shortfall in its capital. China's insurance market expanded 14 percent to $74 billion last year, the China Insurance Regulatory Commission said in January.

Carlyle and Prudential agreed in December 2005 to take a 25 percent stake in China Pacific Life Insurance Co., a unit of China Pacific, for 3.3 billion yuan ($431 million).

China Pacific's board approved the investment in 2005 on condition that Carlyle convert its stake in China Pacific Life into shares of China Pacific Group later, people involved in the matter said at the time.

The Carlyle-led group will hold the shares through Carlyle Holdings Mauritius and Parallel Investors Holdings, which will own 4.2 percent and 15.7 percent respectively of the Shanghai-based insurer, the statement said.

Shenergy Group, a Shenzhen-based energy producer, will own 19.1 percent of China Pacific Group. Baosteel Group Corp., China's biggest steelmaker, will own 15.3 percent and Dalian Shide Group will take 8 percent, the regulator's statement said today. It didn't identify the other stakeholders.

The combined investment will give China Pacific 6.7 billion yuan of registered capital, the statement said.