UPDATE 1-HK's Sun Hung Kai taps 3 banks for consumer finance spinoff -sources

Thu Apr 3, 2014 3:41am EDT

(Adds details, background, Hong Kong IPO volume data, CVC)

HONG KONG, April 3 (Reuters) - Sun Hung Kai & Co Ltd has appointed three banks to underwrite the sale of its consumer finance division, people familiar with the matter told Reuters on Thursday.

Sun Hung Kai's move to spin off United Asia Finance Ltd (USF) into a separate, listed entity comes amid strong demand for Hong Kong banking assets. The move also comes amid a resurgence in Hong Kong IPO and equity capital market volumes.

Sun Hung Kai chose JPMorgan Chase & Co, Morgan Stanley and UBS AG to run the sale of UAF, which is expected to value the business at around $3 billion, the people said.

"The consideration of a potential separate listing of UAF remains at a preliminary stage," the company said.

JPMorgan, Morgan Stanley and UBS declined to comment.

Separating UAF as a listed entity would allow its parent to better capture the recent demand for Hong Kong banking businesses.

Singapore's Oversea-Chinese Banking Corp Ltd announced a $4.95 billion offer for Hong Kong family run lender Wing Hang Bank on Tuesday. Yue Xiu Group, the trading arm of China's Guangzhou city government, agreed last October to buy three-quarters of Hong Kong's Chong Hing Bank Ltd for about $1.5 billion.

Sun Hung Kai bought UAF in 2006. In 2010 Sun Hung Kai raised about $278 million after selling a 19 percent stake in itself to private equity firm CVC Capital Partners, with most of the funds going for the expansion of UAF in mainland China.

UAF had about 30 branches in mainland China at the time of the CVC investment, growing to 105 by the end of 2013. The consumer finance business, with a loan book of more than HK$10 billion ($1.3 billion) at the end of last year, also had 49 branches in Hong Kong.

Hong Kong IPO volumes in the first quarter totalled $5.9 billion, up from the $1.03 billion a year ago, according to ThomsonReuters data. Several large deals are expected to float this year in Hong Kong, a boost to the city's former world leading IPO market, which suffered from a steep slowdown last year.

(Reporting by Stephen Aldred; Additional reporting by Elzio Barreto and Yimou Lee; Editing by Michael Flaherty, Christopher Cushing Matt Driskill)

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