PE-backed China Huarong launches Hong Kong IPO
Huarong Asset Management, one of four groups tasked with managing non-performing loans (NPLs) from Chinese state-owned banks, is looking to raise up to $3 billion in a Hong Kong IPO.
The Chinese bad debt manager is offering a total of 6.31 billion shares, including no more than 607 million shares from China's Ministry of Finance and a maximum 17 million shares from state-backed food giant COFCO Group, according to Reuters.
Huarong received regulatory for the IPO listing in August but it was delayed due to global market volatility.
In August 2014, it sold a 22.51% stake for RMB14.54 billion ($2.35 billion) to eight investors, including China Life Insurance, Warburg Pincus, CITIC Securities, Malaysia's Khazanah Nasional, China International Capital Corp. (CICC), COFCO, Fosun International and Goldman Sachs, a filing showed.
China Life and Warburg Pincus have interests of 5.05% and 6.3% in the company, respectively. CITIC Securities has 2.42%, Khazanah 2.31%, CICC 2.29% and Fosun International 1.53%. Goldman holds 0.45%.
Huarong is the largest of China's asset management companies (AMCs) with total assets of RMB669 billion as of the end of March. It was established in 1999 and is majority-owned by the Ministry of Finance.
Most of the company's revenue is derived from distressed asset management fee, which accounted more than 56% of total revenue last year. It also has operations in financial services, asset management and investment. The company reported a net profit of RMB13 billion last year, up from RMB10.1 billion in 2013, as its purchases of distressed assets rose dramatically.
In 2013, China Cinda Asset Management, another of the four AMCs, raised $2.9 billion through a Hong Kong IPO. The company previously received strategic investment from the likes of CITIC Capital, UBS and Standard Chartered alongside the National Council for Social Security Fund (NSSF). Boyu Capital is also understood to have invested.
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