Huarong To Set Terms For US$2.8 Billion Hong Kong IPO

October 13, 2015

NewsStandOnline.Net (13-October-2015): China Huarong Asset Management Co, the nation’s biggest bad-loan manager, and some existing investors are seeking as much as US$2.8 billion from a Hong Kong initial public offering (IPO), people with knowledge of the matter said.

The Beijing-based company as well as China’s Ministry of Finance and Cofco Corp plan to offer a combined 6.3 billion shares at HK$3.03 to HK$3.39 apiece, said the people. Huarong would start taking orders Oct 15, they said, asking not to be identified because the information is private.

Huarong, one of four companies set up by the government in 1999 to clean up state-owned banks, is seeking to expand as bad loans rise in China.

Huarong To Set Terms For US$2.8 Billion Hong Kong IPO

China Cinda Asset Management Co, the first of Huarong’s peers to become publicly traded, has lost 11% since its US$2.8bil Hong Kong IPO in December 2013.

Huarong aims to set aside about 70% of its IPO for so-called cornerstone investors, the people said. Such investors typically agree to hold on to their stock for six months in return for guaranteed allocation.

If finalised at that level, Huarong could have the highest cornerstone proportion for any billion-dollar Hong Kong IPO, surpassing the 67% set aside by China Railway Signal & Communication Corp in its July share sale, data compiled by Bloomberg show.

A Hong Kong-based external spokeswoman for Huarong declined to comment. Reutersreported the price range earlier in Hong Kong, citing unidentified people.

Huarong’s pre-IPO investors include Warburg Pincus LLC, China International Capital Corp and Goldman Sachs Group Inc, according to a term sheet obtained by Bloomberg earlier this month.