BUSINESS

Bad-Debt Manager Cinda Sets up $2.7 Billion Fund to Help Revitalize Property Sector

Published: Jan. 11, 2025 12:05 a.m. GMT+8

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A pedestrian crosses a road in front of a real estate advert in Zunyi, Guizhou province. Photo: Bloomberg

China Cinda Asset Management Co. Ltd., the state-owned bad asset manager, is launching a 20-billion-yuan ($2.7 billion) fund with its affiliates to come to the aid of struggling real estate developers and rescue projects threatened by the property downturn.

China Cinda is one of four national asset management companies (AMC) created by Beijing in the late 1990s to dispose of the bad loans that state-owned banks had amassed at the time. China Galaxy Asset Management Co. Ltd. won approval to become a fifth national AMC in 2020.

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China Cinda Asset Management is launching a 20 billion yuan fund to support struggling real estate developers and projects facing challenges due to the property downturn since late 2021.
China Cinda will invest 10 billion yuan as a priority limited partner in the fund, and Cinda Real Estate will contribute an additional 10 billion yuan as a subordinated limited partner.
The fund aims to focus on revitalizing troubled projects, ensuring unsold value and future cash flow cover debts and investments, while AMCs have struggled to resolve 70% to 80% of the financially troubled projects.

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What Happened When

Late 1990s：: China Cinda Asset Management Co. Ltd. and three other national AMCs were created by Beijing to dispose of bad loans from state-owned banks.

Between 2014 and 2018：: AMCs increased their purchase of developers' liabilities due to a surge in the property market.

2020：: China Galaxy Asset Management Co. Ltd. won approval to become the fifth national AMC.

Since late 2021：: Developers have been struggling to refinance debt and meet obligations due to the real estate market slowdown.

From 2022 onwards：: Regulators encouraged AMCs to help mitigate sector risks by purchasing distressed developers' liabilities or funding mergers and acquisitions.

Since 2022：: The five AMCs have been focusing on supporting specific real estate projects to ensure completion and delivery, and nearly all five major AMCs established funds ranging from 10 billion to 20 billion yuan.