China Huarong, one of the country’s four state-run asset managers tasked with dissolving banks’ toxic assets, has shelved plans for a listing in mainland China amid poor financials and an ongoing investigation of its former chairman, Bloomberg reports.
In a filing made earlier this week, Huarong wrote that “a prominent” drop in earnings was among the reasons for the withdrawal, despite telling investors that business was back to normal just last week.
Huarong hit headlines this year after former chairman Lai Xiaomin was placed under investigation, raising questions regarding the company’s financial practices and investment decisions.
“Our biggest concern is Huarong’s elevated leverage,” said S&P analyst Liang Yu. Huarong now holds a BBB+ rating from the agency, down from A- in August.
“Without the ability to generate capital internally nor raising funds externally, Huarong wouldn’t reduce its leverage as fast as we had expected,” Liang added.