China Huarong Asset Management to Acquire Stake in Citic Ltd.

China Huarong Asset Management witnessed a surge in its shares following its agreement to purchase a minority stake in Chinese state-run conglomerate Citic Ltd. The deal, valued at 13.63 billion Hong Kong dollars (US$1.75 billion), has propelled Huarong's shares to a 12% increase to HK$0.41 in midday trading on Thursday, marking its largest percentage gain this year.

Huarong will acquire a 5.01% stake from Citic Polaris, a wholly owned unit of Citic Ltd., as confirmed in an exchange filing made on Wednesday. The purchase price of HK$9.35 per share represents a 29% premium over Citic's closing price on Wednesday. The acquisition will be financed by Huarong's internal resources.

This strategic move is expected to enhance Huarong's asset quality, optimize its industrial layout, and improve its financial conditions, according to the company statement.

In another update, Huarong disclosed its progress in streamlining its business operations. The company successfully disposed of equity interests in five subsidiaries, resulting in a gain of 3.5 billion yuan (US$483 million).

Huarong, which is majority-owned by China's Finance Ministry, holds the distinction of being the largest manager of nonperforming loans and other bad debt in the country.