China Cinda Asset Management Co. Ltd.'s high-profile December listing in Hong Kong will remain a footnote in the emergence of a publicly traded money management segment in Asia if the firm can't build on its “bad bank” origins to become a respected third-party manager.
The successful $2.5 billion listing by the first of four firms China's government set up to cleanse bad debts from bank balance sheets following Asia's 1997-1998 financial crisis will encourage similar entities in the region to come to market.
China Cinda's 39% gain since its Dec. 12 listing, after its shares were priced at the HK$3.58 (US$0.46) top of the prospective range announced by the firm's bankers, should set the stage for listings by other government-owned firms this year, such as China Huarong Asset Management Co. Ltd., and Bangkok Commercial Asset Management Co. Ltd. in 2014, bankers say.
In a region that has yet to spawn big, public pure-play money managers — such as BlackRock Inc., with its $54 billion market capitalization, and Franklin Resources Inc., at $36 billion in the U.S. — the listings of such government-launched firms will give Asia's fledgling publicly traded money management segment a profile distinct from those in the U.S. or the U.K.
China Cinda's business model, based on proprietary investing, “is very different compared to any of the listed U.S. or U.K. managers, including distressed specialists like Oaktree” Capital Management LP, noted Karamvir Gosal, founder and managing member of Valores Capital Partners LLC, a boutique merchant bank with offices in New York and Mumbai, focused on the money management industry.