HONG KONG (AP) — A Chinese bad-debt management company’sshares soared in their Hong Kong debut
Thursday, highlighting stronginvestor appetite for a business that will flourish if the world’s No. 2economy
stumbles.China Cinda Asset Management’s shares rose 27percent to close at 4.50 Hong Kong dollars ($0.58)
after rising as muchas 34 percent during the day.The state-owned company is China’s first ever distressed
asset management company to go public.It’sa so-called "bad bank," one of four big entities
originally tasked withmoving nonperforming loans off the books of China’s state-owned banks.Cindaraised
HK$18.5 billion ($2.4 billion) from its stock offering, makingit the biggest initial public offering in Hong
Kong this year.Therewas exceptionally high interest from local retail investors, whosedemand for the shares
was 160 times the number available, and biginstitutional investors, whose portion of the global offering
was"significantly oversubscribed," according to a filing with Hong Kong’sstock exchange this
week.The company offers investors a new twiston China’s growth story that has been based for decades on the
promiseof supercharged economic expansion.Investors are betting thecompany, which makes money buying up
distressed assets at a discount andreselling them for a profit, will benefit from rising levels of baddebt
as China’s economy undergoes an uneven recovery after slowing to atwo-decade low in the second quarter.The
country’s leaders saythey’re comfortable with that slower pace. They are trying to shift theeconomy from
reliance on exports and investment in favor of domesticconsumption.In its prospectus, Cinda said net profit
last yearrose 8 percent to 7.3 billion yuan ($1.2 billion). The companylooksset to benefit as the number of
loans in China going sour rises further.Nonperformingloans at Chinese banks surged to 563.6 billion yuan
($93 billion) inthe July-September quarter, 18 percent more than the year before,according to data from the
China Banking Regulatory Commission. However,they accounted for less than 1 percent of total loans as
overall banklending continued to grow."Investors are clearly attracted toCinda’s IPO, which is also
driven in part by the novelty factor," saidMark Chan, a partner specializing in corporate finance at
law firmBerwin Leighton Paisner."It is definitely tempting for otherasset managers to follow suit,
especially if Cinda is able to continueperforming well after its listing."Copyright 2013 The Associated
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