Corstone Capital Acquires $550 Million of Chinese Non-Performing Loan Assets

Corstone Capital (Corstone) late last month announced the final regulatory approval and closing on the purchase of a portfolio of non-performing loans (NPLs) totaling 4.4 billion RMB (US$570 Million) in the Peoples Republic of China.

This is Corstone’s second portfolio purchase of NPLs from the Great Wall Asset Management Corporation (Great Wall), the asset management company for the Agriculture Bank of China.

Albert “Bud” Hawk, the Chairman of Corstone stated that “Corstone is pleased to close our second NPL package. With approximately fifteen NPL packages purchased by foreign investors to date, Corstone believes that we have created a unique process and system to acquire and manage future portfolios.”

As of this recent closing, Corstone’s NPL portfolio exceeds 7.6 billion RMB (US$925 Million). Ulysses G. Auger, II, Managing Partner of Corstone commented, “This additional closing gives us the scale in China to be efficient and effective in our collections, and restructuring allowing us to maximize the value of our assets.” Samjong KPMG FAS Korea (KPMG) acted as the advisor to Corstone in this transaction. KPMG is an internationally recognized financial services firm with experience in the international NPL market.

Beijing Juntong Investment Service Company, Ltd. (Juntong), a Corstone joint venture company, will be the service provider for these assets. At the closing, Mr. He Hong, CEO of Juntong said, “The Chinese NPL market continues to develop and we have built an on-line system and opened local collection centers to better manage the collection and liquidation process. With this recent purchase, Corstone and Juntong have strengthened their position as one of the largest players in the Chinese NPL market.”

Established in 1999, Great Wall is one of four asset management companies founded by the Chinese government with the responsibility for managing and disposing of NPLs. Great Wall presently handles the management and disposition of NPLs from the Agricultural Bank of China and other banks.

Corstone Capital is an international merchant bank headquartered in Washington, DC, with offices in Europe and Asia. Corstone has been active in China for many years, and has offices in Beijing and Shanghai.