Warburg Pincus to invest US$700m in Huarong Asset Management
Warburg Pincus is paying almost US$700m for the biggest chunk of a stake in the bad-loan manager sold to an investor group, sources say
Warburg Pincus will invest close to US$700 million in China Huarong Asset Management, people with knowledge of the matter said, in the biggest investment in the nation's financial industry by a foreign buyout firm.
Warburg Pincus bought the largest portion of a 21 per cent stake that the mainland's biggest bad-loan manager sold to a group of investors for 14.5 billion yuan (HK$18.2 billion), said one of the people, who asked not to be identified because it is private.
Rising loan delinquencies in the mainland are adding to opportunities for the country's asset management companies, set up in 1999 to buy bad debt from state lenders.
Warburg Pincus, whose president is former US Treasury secretary Tim Geithner, raised US$11.2 billion last year for its most recent private-equity fund.
"Huarong is attracting interest because it is one of the largest AMCs in China," Ming Tan, a Hong Kong-based analyst at Jefferies, said yesterday. "It's getting rarer to find such large deals to invest in, especially at a pre-IPO stage where the valuation is more attractive and there's a clear exit timing."
Li Mingxia, a Beijing-based spokeswoman for Warburg Pincus, declined to comment on the investment amount.
Huarong said last week it sold a stake to eight investors including Goldman Sachs Group and Malaysian sovereign fund Khazanah Nasional.
