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Chinas Leading Asset-Management Company Aims for IPO

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Published on : Aug 28, 2014

China’s biggest asset-management company plans to go public by the end of 2015.

Chinese authorities are constantly ramping up their interests towards introducing mixed ownership to state-owned huge companies and call for more private capital investments into the economy.

According to the news report, China Huarong Asset Management Co., Ltd. will collaborate with eight investors found as food industry suppliers to other U.S. banking leaders on the listing. All these eight companies will invest around (2.36 billion U.S. dollars) 14.54 billion yuan in Huarong. The deal has already been approved by the State Council and many other supervision authorities. These eight companies are namely, the China National Cereals, Oils and Foodstuffs Corporation (COFCO), the China International Capital Corporation (CICC), Khazanah Nasional Berhad, Fosun, China Life, Goldman Sachs, CITIC Securities International, and Warburg Pincus  Investors will mutually have a 20.98% stake in the asset-managing company, whereby each company’s share has yet to be revealed.

China Life is the country’s largest insurance company already holding a small stake in Huarong. Following to this is COFCO - a state-owned company that deals in the food industry. Fosun is an investment company (Shanghai-headquartered), CICC is the country’s largest investment bank, and CITIC Securities International (Hong Kong-based) is the brokerage and investment group. On the other hand, the Warburg Pincus and Goldman Sachs were rounded by Malaysian sovereign wealth fund - Khazanah Nasional Berhad.

Lai Xiaomin, Huarong’s board chairman will plan out with the investors in investment, asset management, staff training, and risk control. Huarong is involved with China Life and the Chinese Ministry of Finance (MOF) holding a 1.94% and 98.06% stake, respectively. MOF will certainly decline to 77.5% after the deal is closed.

It was back in 1999 China founded Cinda, Huarong, Orient, and Great Wall as the four basic asset-management corporations to arrange the 1.4 trillion yuan of NPL (non-performing loans) stored from state-owned banks and affected by the Asian financial crisis in 1997. Cinda was the first to go public and call for investors in Hong Kong, in 2012, keeping the future of Huarong into the spotlight. Lai added that the Thursday deal is a much awaited new phase of development that will decide the company’s ownership by both private and state capital.

The Chinese government expects more private capital and foreign investments into state-owned companies.

Warburg Pincus\' managing director David Li of the China division informed Xinhua that the collaboration with Huarong has been the largest investment in China, and that Warburg Pinus is confident about China\'s economic and financial market. Huarong is in the transformation from an NPL management into a financial group of businesses involving securities, banks, leasing, and insurance, said Sun Xiaoxia, MOF’s finance department director. MOF plans to support the growth and development of Huarong, added Sun.

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