US private equity firms KKR (KKR.NYSE) and BlackRock (BLK.NYSE) and a number of other investors are in talks to buy a 15-20% stake in China’s largest bad loan manager, China Huarong Asset Management, ahead of an eventual initial public offering, Reuters reported, citing sources familiar with the matter. Huarong’s planned stock offering will allow the company to raise money to expand its business. As the Chinese economy slows, a growing number of loans are expected to turn sour, which should boost prospects for Huarong and China’s other three asset managers to remove around US$230 billion worth of bad loans from China’s top four state lenders.