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China's Asset Management Begins Int'l Roadshow
The China Huarong Asset Management Corporation, China's largest such company, kicked off an international roadshow Tuesday, in a fresh move to lure investors in Britain and the United States.
The two-week-long roadshow is China's first move of the kind to introduce to foreign investors the investment potential of the country's non-performing assets and its policies and legal framework regarding the sales of the assets, a company official said.
A panel led by Huarong's president Yang Kaisheng, former vice- president of the Industrial and Commercial Bank of China, will hold talks and negotiations with foreign experts and entrepreneurs on asset sales with the help of Huarong's advisor, Ernest & Young (E&Y), a world leading accounting firm.
The U.S. financial-services company has helped Huarong select an asset package in non-performing assets for overseas sales this time.
Earlier in February, Huarong signed a cooperation contract with E&Y, to appoint the latter as its sole advisor to bring to the market a portfolio of Huarong's non-performing loans and assets of more than three billion U.S. dollars.
Though the package is about five percent of Huarong's total portfolio, the pact set in motion an unprecedented mission to open the world's second largest market, after Japan, for bad loans to foreigners, insiders say.
The two sides will work together to establish an "objective" assets evaluation system based on international practices, to realize the transfer of Huarong's equity and shareholding rights to foreign investors.
"Investors will certainly hope for a low price and we'll be trying for a relatively high price, as we shoulder the responsibility of maximizing state assets," said Yang in an interview with Xinhua.
"However, I think the final adjustment will be made by the market," Yang said, adding, "At the current stage, the biggest problem in cooperating with foreigners stems from their misunderstanding of Huarong's assets."
To most foreigners, Huarong's assets are "bad loans" that can hardly be retrieved, Yang said. "But I would rather label them as 'improperly disposed assets' than bad loans."
The huge potential of the assets has not been fully discovered and needs shrewd investor's participation, he added.
Huarong aims to retrieve about 30 cents on the dollar from asset sales, according to Yang's conservative estimation.
Currently, China's four state financial asset management companies have purchased non-performing loans totaling 1.3 trillion yuan from state-owned commercial banks, and Huarong's assets lead all the other three to hit 407.7 billion yuan, with more than 70,000 debtors.
By the end of last year, Huarong had retrieved 3.28 billion yuan worth of asset, including 2.06 billion yuan in cash, by handling 7.86 billion yuan of the non-performing assets.
Yang said that Huarong aims to dispose of 150 billion yuan worth of non-performing assets in three years and will strive to handle the remaining part by the year 2006.
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