How to deal with non-performing assets discussed at seminar

A seminar focusing on China's non-performing assets (NPA) industry was held in Beijing on Jan 14.

Centered on the theme of "creating win-win situations through joint efforts," the seminar invited leading financial industry figures to share their views on the opportunities and risks of China's NPA industry.

Lin Zhiwei, secretary-general of the Beijing Arbitration Commission and Beijing International Arbitration Center, delivered the keynote speech during the event.

"The issue of the disposal of non-performing assets is very important. How to deal with NPA? How to price NPA? How to finally revitalize these assets? These problems concern industry insiders, along with the entire economic sector," said Lin.

Lin said that the seminar provided an opportunity to strengthen cooperation in all sectors of China's NPA industry and offer better dispute-resolution services for the disposal of NPA.

Wang Zhongmin, former vice chairman of China's National Council for Social Security Fund, echoed this view, adding that with the development of China's credit evaluation and arbitration systems, along with special investment funds, NPA issues will be resolved more efficiently in future.

Joseph Gagnon, Managing Director of Warburg Pincus, shared his view on the investment strategy of the US-headquartered private equity firm.

"Warburg Pincus is a growth investor. We look for three things when we make an investment. We back top management teams. We invest in growth companies in growth industries and help them become leaders in their industries. Thirdly, we want to make sure our interests are fully aligned to create win-win situations for both of us," said Gagnon.

In dealing with NPA, the investor said that investor-entrepreneur partnership approach is the key to growth. "Warburg Pincus is there to play a supportive role to make the companies and entrepreneurs more successful. We take the skill-sets of the entrepreneurs and provide them with infrastructure such as capital, to turbo-charge their growth.”

"We are excited about the opportunities in the NPA field in China, and we look forward to further exploring the market through our joint venture in cooperation with Hande Group," Gagnon added.

Wang Haibao, CEO of Beijing Hande Donghui Asset Management, said that, in disposal of NPA, the company focuses on the diversified and flexible structures of non-performing loan transactions, mutually beneficial financing structures and professional, accurate judgment on underlying assets value against non-performing loans.

On the disposal and investment of real estate NPA, Wang said that Hande Donghui pays more attention to non-performing loan disposal and investment in urban areas, value enhancement on underlying assets, as well as asset security.

"As an NPA investor, preventing financial risks and revitalizing distressed assets is the original intention of industry players. The main aim is to improve the operational efficiency of NPA, to allow high-quality assets to flow, and to achieve multi-win outcomes," Wang said.

"Some assets are poorly performing due to poor operations. Our obligation is to raise the value of these assets and make stagnant and inefficient assets run efficiently in cities," Wang said.

Meanwhile two roundtable discussions highlighted topics like China's NPA industry's cooperation modes and mechanisms and difficulties in the disposal of NPA.

Leaders in the NPA industry also exchanged ideas with one another and reached a certain consensus on the future development of the industry.

"In the future, the industry should establish an ecological circle for the disposal of NPA, promote diversified cooperation, achieve win-win situations, and open up sustainable development to promote the sound and rapid development of China's real economy," said Bu Xiangrui, legal director of China Banking Association.