China Cinda to list in Hong Kong

“Bad bank” will begin determining demand this week.

Media sources said China Cinda Asset Management Company, one of China’s four funds created in 1999 to buy bad debts from the nation’s banks, has received approval from the Hong Kong Stock Exchange for an initial public offering.

The state-controlled “bad bank” plans to raise as much as US$3 billion from the HK IPO. A US$3 billion IPO will be Hong Kong’s biggest since November 2012 when People’s Insurance Company (Group) of China Ltd. raised US$3.6 billion, said Bloomberg.

Cinda’s listing is the latest step in its transformation from an asset manager into a financial company with businesses in trusts, real estate and investment banking. The share sale will also help revive Hong Kong’s weakened IPO market where proceeds are rebounding from a nine-year low.

Analysts said market sentiment is slowly improving as tapering is delayed in the U.S. and better economic indicators come out of China.

The Chinese government set up Cinda, China Orient Asset Management Corp., Huarong Asset Management Co. and Great Wall Asset Management Corp. in 1999 to help rid the banking industry of RMB1.4 trillion in non-performing loans.