China Huarong buys stake in Citic Limited for US$1.7 billion; distressed asset manager to adopt Citic name
- Company will acquire a 5.01 per cent stake at HK$9.35 per share from Citic Polaris, a wholly owned subsidiary of Citic Group
- Huarong, one of China’s largest distressed debt managers, will change its name to China Citic Financial Asset Management
State-owned distressed-asset manager China Huarong Asset Management has agreed to buy a 5.01 per cent stake in Citic Limited for HK$13.6 billion (US$1.7 billion), according to Huarong’s filing with the Hong Kong stock exchange on Wednesday.
Huarong will acquire the stake at HK$9.35 per share from Citic Polaris, which is a wholly owned subsidiary of Citic Group, a state-owned investment company backed by the finance ministry. Huarong also announced it will change its name to China Citic Financial Asset Management.
The transaction will help Huarong improve its asset quality and financial conditions, optimise its industrial layout and replenish capital to make it more profitable in the long term, it said in the filing. The acquisition marks “an important measure to optimise the layout of state-owned assets”, it said.
Citic Polaris owns a 32.5 per cent stake in Citic Limited, which is listed on the Hong Kong stock exchange and is a constituent of the Hang Seng Index. Citic Limited’s business spans five segments, including financial services, materials and advanced manufacturing, according to the filing.
The move “is good for market sentiment and from a technical perspective,” said Ting Meng, senior credit strategist at ANZ Banking Group. “It could enable onshore investors to invest in Huarong under Citic Group line.”
