PE-backed China Cinda to raise $2.5b in Hong Kong IPO - report
PE-backed China Cinda Asset Management Corp, one of four groups set up to absorb non-performing loans (NPLs) from the country’s Big Four state-owned banks, is expected to raise up to $2.5 billion in its Hong Kong IPO.
According to IFR, Cinda will sell 5.3 billion shares at HK$3.00-3.58 apiece, although the size of the offering is still under discussion. CITIC Capital, UBS and Standard Chartered invested in the company last year alongside the National Council for Social Security Fund (NSSF), paying $1.7 billion for a 16.5% stake. Boyu Capital is also understood to be an investor.
Of the four asset management companies (AMCs) established in 1999 to absorb the banks' bad debts, Cinda is the most profitable. Its asset management business recorded a net profit of RMB7.2 billion ($1.2 billion) in 2012, up 6% year-on-year.
While NPLs in China are expected to increase, potentially offering more business to Cinda, concerns have been expressed over the firm's lack of clarity on its pricing policies, recovery rates and plans to diversify into other areas of financial services.
Cinda was originally tasked with managing the NPLs at China Construction Bank, which needed to be restructured and recapitalized ahead of its IPO. Cinda has accumulated a sizeable real estate portfolio by foreclosing on bad debts, as well as taking stakes in a wide range of companies through debt-for-equity swaps.
Separately, The Wall Street Journal reported that CVC Capital Partners will make a partial exit from Asia Health Century International when the Chinese drug retailer goes public next month, also in Hong Kong. The PE firm bought a 24.2% stake in Asia Health Century for $84.1 million in 2011.
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