China Life buys 2 billion newly issued shares in Bad-Asset Huarong asset manager

What’s new: China Life Insurance (Group) Co. acquired 1.96 billion newly issued Hong Kong listed shares in China Huarong Asset Management Co. Ltd., acting on a government-backed plan to save the delinquent asset manager in debt.

The state insurer now controls 7.29% of Hong Kong-listed shares of Huarong after the Nov. 17 purchase, according to a notice released by China Life on Wednesday.

The purchase took place on the same day that Huarong agreements concluded with five strategic and financial investors, including China Life, to sell them newly issued shares worth 42 billion yuan ($ 6.6 billion). If all the deals are made, China Life will control a 2.44% stake in Huarong.

The background: The injection of cash from investors, first announced in August, is part of a rescue package for the Huarong State Corporation. The company reported a net loss of 102.9 billion yuan in 2020 and had loans of 782 billion yuan at the end of June this year, of which 578 billion yuan of the total due within a deadline. one year.

To raise capital, Huarong was sell bad assets and abandon one’s stakes in subsidiaries outside its main activity of disposing of assets in difficulty. Earlier this month, Huarong obtained regulatory approval for sell bonds to raise up to 70 billion yuan.

Related: Exclusive: Citic Group Likely to Become Huarong’s Biggest Shareholder

Quick Takes are condensed versions of stories related to China for quick news that you can use.

Contact reporter Zhang Yukun (yukunzhang@caixin.com) and editor Heather Mowbray (heatthermowbray@caixin.com)

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