HONG KONG, July 6 (Reuters) - China Huarong Asset Management Co Ltd, a state-owned bad debt management firm, has formally applied for an initial public offering (IPO) in Hong Kong, an exchange filing showed on Monday, in a deal expected to raise up to $3 billion.
Huarong did not disclose the target size of its offering in the filing, but IFR, a Thomson Reuters publication, has reported the company is seeking a $3 billion listing, citing people familiar with the transaction.
Huarong would be the second of China's four biggest bad debt managers to list after China Cinda Asset Management Co Ltd raised $2.8 billion in Hong Kong in December 2013.
China's bad debt management firms make money by buying soured loans from banks and other companies and then attempting to earn money by restructuring the debts or recovering cash from the borrowers.
Huarong's IPO application showed this has been a lucrative business in China's slowing economy. The company's distressed debt division, its core business, made a profit of 9.3 billion yuan ($1.50 billion) in 2014, the filing showed, up from 7.6 billion the previous year.
Huarong's 2014 net profit was 13 billion yuan, the filing showed. ($1=6.2089 Chinese yuan) (Reporting by Lawrence White; Editing by Clarence Fernandez)