Companies

Cinda planning public float on domestic bourses

By Li Xiang (China Daily)
Updated: 2010-07-17 09:11
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BEIJING - State-owned asset management company China Cinda Asset Management Co Ltd is planning to list its shares on the domestic capital market and rope in large financial institutions, including major commercial lenders, as strategic investors after it completes the restructuring process, president Tian Guoli said on Friday.

Cinda became a stockholding company owned by the Ministry of Finance on Friday with registered capital of 25.1 billion yuan ($3.7 billion).

"We'd like to invite large and influential financial institutions both at home and abroad to join us as strategic investors," Tian said.

"We are going to list our shares soon when the market conditions are favorable," he said. Tian, however, did not disclose the listing timetable and the capital that the company plans to raise.

Recent media reports said China Construction Bank Corp was keen on becoming a strategic investor in Cinda.

Cinda's transformation into a stockholding company is a precursor to other State-owned debt-clearing and asset-managing companies changing into more market-oriented financial institutions with diversified businesses.

After the financial restructuring, Cinda's main business will still be in undertaking, disposing and managing non-performing assets of financial institutions as the business has immense profit margins, Tian said.

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But the company is also expanding rapidly into the broader business of financial services like fund management, securities and insurance brokerage and financial leasing.

In 1999, the government set up four asset management companies - China Cinda Asset Management Corp, China Great Wall Asset Management Corp, China Orient Asset Management Corp, and China Huarong Asset Management Corp - to help spin off the 1.4 trillion yuan non-performing assets of the nations big four state-owned commercial lenders.

But with the successful restructuring and listing of the four banks, the status of the asset management companies became a problem. Last month Cinda got approval from the State Council to pilot the financial restructuring by setting up a joint account with the Ministry of Finance.

The account will help Cinda get rid of more than 200 billion yuan of losses during the callback of banks' bad assets with a fixed term of 10 years.

The company will also stop paying interest on its yuan re-loans from the central bank and deposited the same to the joint account.

The other three asset management companies are expected to follow Cinda's restructuring model and reform into shareholding financial institutions that are more market-oriented and will eventually seek public listings in the domestic capital market.