* Goldman, Warburg Pincus, Khazanah among seven investors in
* Huarong raising funds ahead of planned initial public
* China's bad debt managers see rising profits amid economic
(Recasts lead, adds Citigroup is advisor)
HONG KONG, July 22 Goldman Sachs and
private equity firm Warburg Pincus are among the investors
nearing a deal to buy an up to 20 percent stake in China Huarong
Asset Management Ltd for about $2 billion, seeking a share in
the profitable business of bad loan management in China.
Other investors preparing to buy into China's biggest
manager of non-performing loans include Malaysian state investor
Khazanah Nasional Bhd, China state-backed CITIC Group
, China International Capital Corp, conglomerate Fosun
Group and China state-backed COFCO Corp, the people
familiar with the matter told Reuters.
Citigroup is the advisor for the deal, said the
people, who declined to be identified as the matter remained
CICC, Citigroup, Fosun, Goldman Sachs and Warburg Pincus
declined to comment. The relevant officials at Huarong, COFCO,
CITIC and Khazanah did not immediately respond to calls and
emails seeking comment.
State-owned bad debt managers like Huarong are benefiting
from a rise in non-performing loans in China as the economy
slows. The company had assets worth $65.7 billion under
management at end-2013 and its net profit for last year jumped
44 percent to 10.1 billion yuan.
Huarong is planning to sell the stake to strategic investors
ahead of an eventual initial public offering and the seven
investors are likely to sign an agreement over the next month,
the sources said.
China's biggest banks have said they want to manage their
own non-performing loans, attracted by the profits of the bad
debt managers like Huarong.
Huarong's smaller peer, state-owned China Cinda Asset
Management Co Ltd, raised $2.8 billion in an Hong Kong
initial public offering last year. It reported a 26 percent rise
in net profit to 9.1 billion yuan in 2013.
Like Huarong, Cinda sold a stake to strategic investors that
included China's social security fund NSSF, CITIC Capital, UBS
AG and Standard Chartered Bank ahead of its
Established in 1999, Huarong is one of four bad debt
managers that were created by the government to clean up the
balance sheets of China's biggest banks.
Huarong raised $1.5 billion on July 10 in a bond offering
that saw huge demand from investors, in a sign of increased
confidence in the ability of bad debt managers to profit from
the rise in non-performing loans.
That deal followed a $1.5 billion bond offering by Cinda in
May last year. Both bond deals, and Cinda's IPO, bring the total
raised by Chinese bad debt managers to $5.5 billion since
December last year.
(Reporting by Stephen Aldred and Lawrence White; Additional
reporting by Elzio Barreto, Saikat Chatterjee and Yantoultra
Ngui; Editing by Denny Thomas and Miral Fahmy)