Goldman, Warburg And Others To Acquire China Huarong Stake For $2.4B

China’s largest state-owned asset management firm China Huarong Asset Management Co., Ltd. has been approved by regulators to sell a 20.98% stake to a consortium of eight investor for RMB14.5 billion (US$2.4 billion).

The China Banking Regulatory Commission (CBRC) hopes the investment would accelerate improvement of Huarong’s internal management and operations, in preparation for an initial public offering, as soon as next year in Hong Kong.

The consortium includes Warburg PincusCITIC Securities International Co Ltd, Malaysian sovereign wealth fund Khazanah Nasional Bhd, China Life Insurance (Group) Co, Goldman Sachs, COFCO Corp, Fosun International and China International Capital Corporation Limited.

Huarong is one of China’s four "bad banks" set up in the late 1990s that took over non-performing loans from China’s "Big Four" state-owned banks.

Another bad bank, China Cinda Asset Management Co., Ltd. completed an IPO in Hong Kong last year, raising a total of US$2.5 billion.

The company’s pre-provision operating profit jumped by 66% to RMB19.9 billion in 2013, as a result of expanding bad loan problems in China.

 
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