Huarong on the lookout for strategic investors

Asset manager hopes to line up pension fund and financial firms as investors ahead of IPO

PUBLISHED : Wednesday, 13 March, 2013, 12:00am
UPDATED : Wednesday, 13 March, 2013, 5:27am


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China Huarong Asset Management aims to line up the national pension fund and major international institutions as strategic investors before its initial public offering in Hong Kong and on the mainland in 2016, said chairman Lai Xiaomin.

"We plan to make substantial progress in introducing strategic investors by the end of this year or the first half of next year. We hope to complete the preparation work for the IPO by the end of 2015 and eventually go public in 2016," Lai told the South China Morning Post yesterday.

He said he recently visited countries including the United States and Singapore where more than 20 financial institutions had shown an interest in investing in Huarong, which sat on more than 30 billion yuan (HK$37.4 billion) of net assets at the end of last year.

We plan to make substantial progress in introducing strategic investors by the end of this year or the first half of next year

"They are multinationals, global banks and fund management companies, many of them very famous," Lai said on the sidelines of the National People's Congress, without disclosing their names.

Huarong restructured in September last year into a joint-stock company in which China Life Insurance took a 1.94 per cent stake, with the rest owned by the Ministry of Finance.

Beijing set up four government-owned asset management companies - Huarong, Cinda, Great Wall and Orient - in 1999 to dispose of 1.4 trillion yuan of distressed loans from the Big Four commercial lenders as part of an overhaul of state banks.

Huarong has handled distressed debt worth 680 billion yuan since, mostly from Industrial and Commercial Bank of China, the country's largest lender by assets.

Lai said the national pension fund would be Huarong's favoured choice as an investor.

Huarong would also strengthen co-operation with ICBC, he said, but added that no formal discussion with the bank on strategic investment had begun as yet.

Huarong had been cleared to launch a unit in Hong Kong - its first overseas operation - hopefully in the first half of this year to expand its asset management business to the city, Lai said.

He urged Beijing to allow the four asset management agencies to carry out new businesses such as wealth management after having met the goal of handling the Big Four banks' bad debt.

Huarong hoped to handle debt accumulated not only from the financial sector, but also from other sectors such as state-owned enterprises and local governments' financing platforms, Lai said.

It made a net profit of 12.06 billion yuan last year - 2.4 times that in 2011. But Lai said he hoped to slow the company's growth for more sustainable development, targeting a net profit increase of about 25 per cent this year.