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China Great Wall, seeking IPO, enters 'new era' as a joint-stock firm
December 11, 2016 / 7:40 AM / a year ago

China Great Wall, seeking IPO, enters 'new era' as a joint-stock firm

BEIJING (Reuters) - China Great Wall Asset Management Co officially launched as a restructured joint-stock firm on Sunday, with an eye towards a market listing and a bigger role in tackling China’s mounting bad debt.

Managements and officials present a ceremony for founding China Great Wall Asset Management Co. in Beijing, China, December 11, 2016. REUTERS/Shu Zhang

Great Wall is one of the country’s Big Four state-owned bad debt managers set up in 1999 to purchase non-performing loans from the country’s four biggest state-owned banks.

It has handled about 1.7 trillion yuan ($246.23 billion) in bad debt so far.

The transition to a shareholding company means Great Wall, which was previously wholly-owned by China’s finance ministry, can now sell stakes to new shareholders and list itself on a stock market.

Great Wall chairman Zhang Xiaosong said at a ceremony in Beijing on Sunday the restructuring marks “a new era” for the company, which will continue to focus on bad debt solutions and asset management to help curb financial risks and support China’s economic development.

The move means it could list itself on a domestic or offshore stock market as early as the first half of next year, which would expand its capital base and allow it to take a bigger role in helping the government manage debt issues.

Senior officials from the finance ministry, the central bank and the banking regulator attending Sunday’s ceremony emphasized the importance of distressed debt managers to help resolve China’s current economic problems, especially ballooning debt.

“The economy still faces increasing downward pressure. In particular, leverage in the non-financial corporate sector continues to rise and bad loans at commercial banks keep rebounding,” Fan Yifei, vice governor of the People’s Bank of China, said at the launch event.

“(We) need to further use financial asset management companies to resolve existing non-performing assets in the financial system to curb financial risks,” Fan said.

Debt has emerged as one of China’s most pressing economic challenges, with the country’s total debt load rising to 255 percent of GDP in the March quarter this year from 147 percent in 2008, according to Moody’s Investors Service. Chinese companies sit on $18 trillion in debt, equivalent to about 169 percent of GDP from 97 percent. Most of this is held by state-owned firms.

“The current non-performing asset market is calling for financial asset management companies to play a vital role,” said Yang Jiacai, assistant chairman of the China Banking Regulatory Commission.

The newly established Great Wall joint-stock firm has a registered capital of 43.15 billion yuan ($6.25 billion).

Its biggest shareholder is China’s finance ministry, which holds a 97 percent stake. The National Council for Social Security fund holds 2 percent and China Life Insurance (Group) holds 1 percent.

Xiao Shijun, head of equity asset department of the social security fund, said the fund hopes to further increase its stake in Great Wall AMC ahead of its planned initial public offering.

Presently, China has two Hong Kong-listed AMCs: China Huarong Asset Management Co and China Cinda Asset Management Co.

Reporting By Shu Zhang and Matthew Miller; Editing by Sam Holmes

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