Huarong IPO in Hong Kong at the end of more than half of the four AMC listing process

Updated: October 20, 2015  Views: 47

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Newspaper reporter Lu Dong

Following the Cinda Asset, four asset management companies (AMC) will usher in a listed new army. Since October 16, AMC largest of China Huarong Asset Management Company Limited ('China Huarong Asset' ) officially released in Hong Kong, issue size of about 5.77 billion H shares, on the 30th of this month and will be trading at the Stock Exchange Main Board listing.

The Huarong Asset listed in Hong Kong, jointly underwritten by Goldman Sachs, HSBC, gold, Citigroup and Industrial and Commercial Bank of China, while its cornerstone investors is strong, including a total of offshore real estate, Zhongrong International Trust, China Oceanwide, Chongqing Fu, China Guangdong Nuclear Power, Castrol, COSCO Capital Management and other 10 enterprises with a total subscription amount will reach HK $ 12.536 billion, of which offshore real estate through the H shares of its wholly-owned subsidiary of the giant Bao Huarong Asset Investment Subscription of approximately HK $ 5.3 billion to become the largest cornerstone investor Huarong Asset H-share IPO in Hong Kong Stock Exchange.

Biggest 'bad bank'

It will be completed by the end of IPO

Due to the disposal of non-performing bank assets main business is known as the 'bad bank' asset management company, after two years of Cinda Asset listed in Hong Kong, China Huarong Asset listed it has entered the countdown stage. As the largest of the 'bad bank 'Huarong Asset will be on sale October 16 to October 22 in the Hong Kong market, and will be traded on the Stock Exchange Board on October 30 in Hong Kong in terms of the current Huarong Asset Net asset size or scale on the tops of the first four AMC as of the end of June this year, Huarong assets of 734.6 billion yuan of total assets, up 22.3 percent compared with the beginning, in the first half net profit of 9.9 billion yuan, an increase of 39.4%, which owns Huarong Xiangjiang River bank, Huarong Securities, Huarong Trust, Huarong leasing, Huarong futures, Huarong home and other 10 subsidiaries.

Huarong Asset prospectus, the Huarong Asset planned sale of about 5.77 billion Hong Kong H shares (depending on whether or not to exercise over-allotment option to decide), of which 5.48 billion H shares will be used as the International Offering, the total number of Offer Shares initially 95% (subject to adjustment), and the remaining 290 million shares of H shares will be done in Hong Kong public offering, accounting for 5% of the total initial Offer Shares (subject to adjustment). The issue Huarong Asset range of HK $ 3.03 -3.39 HK start if over-allotment option, the subscription amount of HK $ 17.48 billion to HK $ -195.6 million. At present, the Ministry of Finance as the main shareholder Huarong Asset, holding it after the completion of the Global Offering of 62.88% of the total issued share capital (exercise of the over- Placing right).

Huarong Asset said the proceeds will be used to replenish the company's capital and financing, and further strengthen the viability of non-performing assets and improve the integrated financial services platform, and the development of asset management and investment business. Currently, Huarong main business assets, including non-performing assets management, finance services, asset management and investment of the three sectors, non-performing assets management business accounted for still more than 50%, the largest proportion. As of June 30, 2015, non-performing assets Huarong business income accounted for 55.2% of total assets, income tax Profit before accounting for 51.6% of total profits. 2014 and the first half of 2015, non-performing asset management business of the early pre-tax profit 9.34 billion yuan and 6.615 billion yuan, with an average pre-tax return on equity reached 26.3% and 26%.

According to the plan, China Huarong Asset intends to raise funds of about 60% for the development of the core business, namely non-performing asset management business, about 30% will be used for development of the financial services business, a subsidiary of the capital increase to the sector, about 10% will be used for development of asset management and investment business, expand investment business of the parent company and its subsidiaries to increase plate.

Four AMC enter

Full commercialization period

In 1999, for the acceptance, management and disposal of state-owned banks' bad assets, the Government established Huarong, Great Wall, Orient and Cinda four asset management companies to dispose of, the Agricultural Bank, Bank of China and China Construction Bank and China Development Bank's non-performing loans from the bank.

Since 2007, the four AMC began commercial operation done, no longer confined to the acquisition of non-performing assets of banks said currently four AMC has entered commercialization period, the four AMC business assets realized by a single bad managed to extend diversified financial services, institutional financial institutions by a single integrated financial holding group change.

As the oldest of Cinda Asset, completed in early June 2010 joint-stock restructuring, in December 2013 and was listed on the Hong Kong Stock Exchange. Huarong Asset in September 2012 completed the shareholding reform, and in 2014 8 month introduced eight strategic investors including China Life Insurance, Warburg Pincus Group, CITIC Securities International, CICC and Goldman Sachs Group, including total amount of 14.54 billion yuan.

And << Securities Daily >> reporter from the stakeholders Orient Asset informed its shareholding restructuring program is awaiting Treasury approval, 'estimates will be completed this year.'

It is noteworthy to mention, before entering full commercialization period, although the four AMC based on years of experience performing assets, and achieved good operating results, but the market is still very intense competition.

AMC not only faced each other four business competitive pressure, but also challenges new local asset management company as of the end of March 2015, China Banking Regulatory Commission has approved the 11 provinces where the asset management company to carry out the acquisition of non-performing assets, business volume, involving a total of Jiangsu, Zhejiang, Anhui, Guangdong, Shanghai, Beijing, Tianjin, Chongqing, Fujian, Liaoning and Shandong provinces and cities.

Essential banking license

Soon to be 'a hand'

Currently, the four AMC have according to their actual situation and characteristics have focused on building a diversified business platform, providing a wide range of financial products and services to support and improve the service system. With the expansion of business, major asset management companies have long Disposal of non-performing assets from special transition mechanism for the integrated financial groups. Such as the upcoming Huarong Asset had obtained securities, financial leasing, banking, trust, futures and foreign joint venture asset management company license, then you can get the insurance license achieve the financial industry-wide license.

Asset management companies to create financial holding group in the road, get a banking license clearly become a priority.

Prior to the listing, Huarong Asset will have its own name, and by the Huarong Asset personally involved in the reconstruction and the holding of Huarong Xiangjiang River bank, and in the beginning of this year, Great Wall Asset has been entered as a strategic investor in Deyang Bank and became the majority shareholder. In addition, Cinda Asset has also confirmed that the upcoming announcement to acquire 100% of Nanyang Commercial Bank. According to << Securities Daily >> reporter, Orient Asset for the upcoming Bank of Dalian has received Palace. At this point, Four AMC will also be 'a staff' banking license.


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