BEIJING--China Huarong Asset Management Co., one of the
country's largest bad-loan buyers, is planning an initial public
offering in Hong Kong this year, Chairman Lai Xiaomin said
Thursday.
Mr. Lai said the stock offering would likely top the $2.5
billion Hong Kong IPO of Cinda Asset Management Co. in late
2013.
Mr. Lai said the stock offering would likely top the $2.5
billion Hong Kong IPO of Cinda Asset Management Co. in late
2013.
Speaking on the sidelines of the opening session of China's
parliament, Mr. Lai said that after the Hong Kong listing, Huarong
would offer shares on a domestic market.
"Chinese banks' nonperforming loans will continue to climb. We
haven't reached the peak yet," Mr. Lai said.
China's slowing economy has fueled an increase in bad debt in
the banking system. That, in turn, has led to a rising appetite
among investors for a chance to participate in the management of
distressed debt.
Goldman Sachs Group Inc., Warburg Pincus LLC and six other
investors last year agreed to pay 14.54 billion yuan ($2.37
billion) for a combined 21% stake in Huarong.
"Investors now pay increasingly more attention to asset
management, especially the distressed asset business," said Mr.
Lai.
China's economy grew 7.4% last year--the nation's weakest growth
in more than two decades. On Thursday, the government lowered its
growth target to about 7% this year.
Mr. Lai said that China's economic growth is unlikely to bounce
back to the double-digit levels of the past. Nonperforming loan
levels will likely rise for the next three to five years, he said,
with the biggest risks in the property sector, in local government
debt and the so-called shadow banking system, which operates
alongside the conventional banking sector.
China set up four state-run asset management
companies--including Huarong and Cinda--in the late 1990s to
resolve bad-loan problems in the banking system. The four companies
took some 1.3 trillion yuan of bad debt off the books of the
nation's top four state-run banks.
Grace Zhu
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