China Life Buys 2 Billion Freshly Minted Shares in Bad-Asset Manager Huarong
What’s new: China Life Insurance (Group) Co. has 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 indebted bad-asset manager.
The state-owned insurer now controls 7.29% of Huarong’s Hong Kong-listed shares after the purchase on Nov. 17, a notice published by China Life on Wednesday shows.
The purchase happened on the same day when Huarong reached deals 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 go through, China Life will control a 2.44% stake in Huarong.
The background: The investors’ cash injection, first announced in August, is part of a rescue package for state-owned Huarong. The company reported a net loss of 102.9 billion yuan in 2020 and had borrowings of 782 billion yuan at the end of June this year, with 578 billion yuan of the total due within a year.
To raise capital, Huarong has been selling bad assets and shedding its stakes in subsidiaries outside its core distressed-asset disposal business. Earlier this month, Huarong got regulatory approval to sell bonds to raise as much as 70 billion yuan.
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