China Huarong Asset Management, overseen by the country's Finance Ministry, has unveiled a significant investment move by purchasing a 5.01% stake in Citic Ltd from Citic Polaris (NYSE:PII). This strategic acquisition, valued at HK$13.63 billion ($1.75 billion), is set to bolster Huarong's asset quality and financial standing.
The deal, internally funded by Huarong, involved buying shares at HK$9.35 each, representing a 29% premium over Citic's closing price on Wednesday. Following this announcement, Huarong's shares experienced a notable surge on Thursday, jumping by 12% to HK$0.41, recording the largest gain for the company within the year.
In addition to this acquisition, Huarong is actively streamlining its operations in alignment with its core focus on managing nonperforming loans and bad debt. The company has recently concluded the sale of equity interests in five of its subsidiaries, resulting in a gain of CNY3.5 billion ($483 million). This downsizing reflects Huarong's ongoing efforts to optimize its business structure and improve profitability.
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