Corstone Capital Purchases $260 million Loan Portfolio from Chinese Bank

Corstone Capital (Corstone) today announced a closing on the purchase of a portfolio of non-performing loans (NPLs) totaling over 2 Billion RMB (US $260 Million) in the Peoples Republic of China.
 
This is Corstone’s third purchase of an NPL portfolio and its first purchase from China Huarong Asset Management Corporation. The latest transaction increases Corstone’s interests in Chinese NPLs to over US $1.2 Billion.

Albert "Bud" Hawk, Chairman and Managing Partner, stated, "We are pleased to surpass the US $1 Billion milestone. This transaction underscores our strong commitment to China and provides another opportunity for us to increase our role and leadership in the Chinese NPL market as it continues to develop and grow."

Michael D. Helmicki, General Partner, commented, "We are excited by the continued expansion of Corstone’s investment in China’s distressed debt market. Our on the ground network and experience are allowing us to build a substantial competitive advantage in managing the life-cycle of these investments, from acquisition to disposal and recovery. Corstone continues to be bullish on the China NPL market, where we see great growth potential in the years to come."

Goodmorning Shinhan Securities and Shinhan Bank were co-investors in the syndicated transaction. Both firms are members of Shinhan Financial Group (NYSE: SHG – News), an internationally recognized financial services firm with experience in the international NPL market.

Corstone has selected a local collection agent to service the assets. According to Ulysses G. Auger, II, Managing Partner, "Using a local Beijing servicer allows us to leverage the strengths and expertise of our internal collections platform to further our competitive advantage in the China market. With our additional capacity, we have the ability and scale to service NPLs in all of the key markets that Corstone had targeted through 2006."

China Huarong Asset Management Company was formed in 1999 as an independent legal entity and a wholly state-owned financial institution. It is the largest of the asset management companies established by the Chinese government to purchase, manage, and resolve the NPLs accumulated under a planned economy system by the state-owned commercial banks.