HONG KONG Aug 16 Deutsche Bank, Goldman Sachs
and Morgan Stanley have held talks with China's Huarong
Asset Management Corp to invest in its $1.5 billion stake sale
ahead of the company's expected initial public offering next
year, the Financial Times reported.
The interest of foreign banks in Huarong comes amid looming
concerns of a surge in bad loans across China. A spike in
non-performing loans would increase the demand for the services
of China's asset management companies.
Huarong, established in 1999, is the biggest of the four
funds that China's government set up to remove an estimated 1.4
trillion yuan ($230 billion) worth of bad loans from the
country's top four state lenders.
Setting up these asset management companies allowed China's
top four banks to shed their bad loans book and to list shares
publicly, beginning roughly eight years ago.
Goldman Sachs, Morgan Stanley and Deutsche Bank
declined to comment. Huarong could not be reached
Huarong plans to raise up to $2 billion by selling a stake
of 15-20 percent, Reuters reported in June. The fund raising
would set the table for an IPO, in a move similar to what Cinda
Asset Management Corp, another bad loan vehicle created by
China, is doing.
The FT, citing people close to the Huarong process, said in
its report on Friday that the company would pursue a Hong Kong
Huarong manages over 300 billion yuan of assets, and its net
profit jumped 66 percent in 2012 to 6.96 billion yuan, according
to its annual report.
Cinda raised $1.6 billion last year from investors including
China's National Social Security Fund, Standard Chartered
and UBS. It has also started working on its