China Huarong Asset Management Co (AMC), the country’s biggest distressed debt manager, said on Wednesday it launched a wholly owned subsidiary as a “strategic platform” to conduct debt-for-equity swaps.
‘The new entity, Huarong Ruitong Equity Investment Management Co, has a registered capital of 300 million yuan (US$43.74 million), Huarong said in an emailed statement. It will be responsible for fundraising, project selection, debt acquisition and equity management for Huarong’s debt-for-equity swap deals, it said.
Since China’s policymakers relaunched the debt-for-equity scheme in October last year to ease the borrowing overhang of its struggling firms, the country’s state banks and bad debt managers have rushed to sign deals with big state-owned enterprises (SOEs) to ease their debt burden.
The country’s big banks, led by Industrial and Commercial Bank of China and China Construction Bank Corp, also said recently that they would launch their own subsidiaries for debt-for-equity swaps.
Huarong, one of China’s Big Four state-owned distressed debt managers, has handled 680 billion yuan in non-performing assets since it was launched by the government in 1999, Chairman Lai Xiaomin said in the statement.
In China’s last round of government-driven debt-for-equity swaps, Huarong conducted deals with 420 large and medium-sized SOEs, Lai said. The total value was 69.7 billion yuan.