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REFILE-UPDATE 1-China Huarong AMC's new debt-for-equity swaps unit to raise $7.3 bln fund
January 18, 2017 / 8:16 AM / 8 months ago

REFILE-UPDATE 1-China Huarong AMC's new debt-for-equity swaps unit to raise $7.3 bln fund

(Refiles to clarify in paragraph 6 that name of chairman is Xiaomin, not Xiaoming)

* Launches wholly owned subsidiary for doing debt-for-equity swaps

* Huarong AMC has handled 680 bln yuan in NPLs since 1999

BEIJING, Jan 18 (Reuters) - China Huarong Asset Management Co’s (AMC) newly launched unit for doing debt-for-equity swaps plans to raise a 50 billion yuan ($7.30 billion) investment fund for deals, the country’s biggest distressed debt manager said.

Since China’s policymakers re-launched the debt-for-equity scheme in October last year to ease the borrowing overhang of struggling firms, the country’s state-run banks and bad debt managers have rushed to sign deals with big state-owned enterprises (SOEs).

The country’s state-run banks, led by Industrial and Commercial Bank of China Ltd and China Construction Bank Corp , also said recently that they would launch their own subsidiaries for debt-for-equity swaps. Since October they have announced such deals totalling more than 300 billion yuan.

China Huarong Asset Management said on Wednesday wholly owned subsidiary Huarong Ruitong Equity Investment Management Co will launch the 50 billion yuan fund but did not specify when.

The unit, which has a registered capital of 300 million yuan, will be responsible for fundraising, project selection, debt acquisition and equity management for Huarong’s debt-for-equity swap deals, Huarong said in an emailed statement.

Distressed debt managers should play their “unique role” during China’s economic slowdown, such as handling non- performing loans and conducting debt-for-equity swaps, China Huarong Asset Management’s chairman Lai Xiaomin told Reuters on the sidelines of the Asian Financial Forum in Hong Kong on Monday.

Huarong, one of China’s Big Four state-owned distressed debt managers, has handled 680 billion yuan in non-performing loans since it was launched by the government in 1999, Lai said in the statement.

In China’s last round of government-driven debt-for-equity swaps, Huarong conducted deals with 420 large and medium-sized SOEs, Lai said. The total value was 69.7 billion yuan. ($1 = 6.8475 Chinese yuan renminbi) (Reporting by Shu Zhang in BEIJING and Julie Zhu in HONG KONG; Editing by Sunil Nair and Muralikumar Anantharaman)

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