Date
24 November 2017
Bad debts in China's banking system could rise for the next three to five years, says Huarong Asset Management's Lai Xiaomin. Photo: WSJ
Bad debts in China's banking system could rise for the next three to five years, says Huarong Asset Management's Lai Xiaomin. Photo: WSJ

Huarong Asset Management plans HK IPO this year

China Huarong Asset Management Co., one of China’s biggest bad-debt managers, said on Thursday that it plans to launch an initial public offering in Hong Kong this year.

Chairman Lai Xiaomin said the deal will likely top the US$2.5 billion that Huarong’s peer Cinda Asset Management Co. raised in late 2013, the Wall Street Journal reported.

The Hong Kong IPO will be followed by a subsequent listing in the domestic market, Lai was quoted as saying on the sidelines of the opening session of China’s parliament in Beijing. 

Goldman Sachs Group, Warburg Pincus and six other investors last year agreed to pay 14.54 billion yuan (US$2.37 billion) for a combined 21 percent stake in Huarong.

Nonperforming loan levels in China will likely rise for the next three to five years, Lai said.

The biggest risks are seen in the property sector, in local government debt and the so-called shadow banking system.

China set up four state-run asset management companies—including Huarong and Cinda–in the late 1990s to resolve bad-loan problems in the banking system.

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