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Asset manager looking at US$3b offering in Hong Kong

China Cinda, set up in 1999 to buy bad debts from banks, has moved into underwriting

PUBLISHED : Saturday, 16 March, 2013, 12:00am
UPDATED : Saturday, 16 March, 2013, 4:25am

China Cinda Asset Management, one of the four funds created in 1999 to buy bad debts from banks, plans to seek about US$3 billion in an initial public offering in Hong Kong, said two people with knowledge of the matter.

The state-owned asset manager might hold the share sale next year, said one of the people, who asked not to be identified.

Cinda, a legacy of China's efforts to clean up a 1990s bad-loan crisis, has expanded into underwriting stock and bond sales, pitting it against Wall Street firms such as Goldman Sachs. The sale may help revive Hong Kong's listings market, where proceeds dwindled to a nine-year low last year.

Cinda and Huarong, the biggest of the four companies created to clean up the bad loans, were looking for strategic investors before going public, said a Beijing-based banker. "Standard Chartered, UBS and Citic Capital have bought small stakes in Cinda, paving the way for a market listing."

Huarong and China Orient - another asset manager - were restructuring their capital and shareholder bases before turning to commercial-driven asset management companies, the people said, as the policy asset managers needed to build skills in asset operations and wealth management.

The Ministry of Finance holds an 83.5 per cent stake in Cinda, while the national pension fund owns 8 per cent, according to a bond prospectus published in October. UBS holds a 5 per cent interest, while Citic Capital and Standard Chartered have 2 per cent and 1.5 per cent, respectively.

Cinda raised 10.4 billion yuan (HK$12.9 billion) selling a 16.5 per cent stake to the pension fund, UBS, Citic Capital and Standard Chartered in March last year, valuing the company at 62.9 billion yuan.

Board secretary Zhang Weidong said in March last year that Cinda had begun preparations for a public share sale in domestic and overseas markets, adding that the company did not have a detailed plan or a timetable. Zhang, based in Beijing, yesterday declined to comment on the size of the share offering.

The central government set up Cinda, China Orient Asset Management, Huarong Asset Management and Great Wall Asset Management in 1999 to help rid the banking industry of 1.4 trillion yuan of non-performing loans. The authorities initially gave these agencies 10 billion yuan of capital each and 10 years to offload the bad debt.

Huarong president Lai Xiaomin said on March 5 that rising bad loans at Chinese banks might create an opportunity for asset management companies like his.

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