China Huarong Asset Management returned almost $2 billion to Citic Group through an investment, in a sign of closer ties after the financial conglomerate led a bailout of the bad debt manager two years ago, reports Caixin. Huarong agreed to buy a 5% stake in Citic for HK$13.6 billion ($1.7 billion) from another one of the group’s entities. It will pay HK$9.35 a share, a 29% premium to Wednesday’s closing price, according to a filing.
The investment will bring “longterm stable financial returns” as it expects to share the profits of Citic which earned HK$75.5 billion of net income in 2022, Huarong said in the filing.
The move is expected to beef up Huarong’s ties with Citic Group, a state-run financial conglomerate that led a $6.6 billion government-orchestrated bailout of the bad bank in 2021. It’ll also lift investor confidence over Huarong’s financial strength that had battered its shares and bonds.