Non-Performing Loans (NPLs)

Overview

While the problem of China's non-performing loans (“NPL”) is well-known, understanding what to do to find the hidden value in pricing or servicing such loans is less so. Whether you need help managing portfolio sales, loan portfolio due diligence, valuation and pricing, transaction structuring or post deal loan servicing, we’re on hand to help you make informed decisions and maximise value.

When it comes to NPL issues, PwC is one of the leading firms in China with the experience to help you with the loan recovery process. Our people have been working on NPL assignments in China since 2000. The depth and breadth of our experience gives us unique insights into the loan valuation process that really help when it comes to portfolio evaluations and pricing discussions.

 

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Potential issues

As a buyer:

  • You’re looking for investment opportunities.
  • You need an independent review and valuation of your target loan portfolio.
  • You need advice on deal structures.
  • You want to be more certain about the accounting and tax implications of potential deal structures.
  • You want to engage a project manager with the right expertise to manage the execution of the deal, and
  • You want to engage an expert to manage the subsequent loan collection process.

As a seller:

  • You want to advertise your portfolio for sale in a more effective way to maximise its potential value.
  • You are looking for potential investors, and
  • You want to engage a project manager with the right expertise to manage the execution of the deal.

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Support

Buy-side services

We offer a full suite of advisory services that can be tailored to meet your requirements: 

  • Identify potential investment opportunities.
  • Conduct loan portfolio due diligence and valuation.
  • Participate in roll-up (loan-by-loan recovery assessment) meetings.
  • Advise on potential deal structures for proposed transactions to mitigate potential risks.
  • Identify accounting and tax implications of potential deal structures and advise on plans to minimise costs.
  • Assist in the deal completion process, including assistance in securing requisite government approval.

Sell-side services

We can act as the lead financial adviser in relation to all facets of non-performing loan sales, including complete management of the disposal process.

Preparation for sale:

  • review, classify and stratify portfolio
  • pool and package sub-portfolios to maximise their potential value
  • advise on the right investor review files, including file content and information collation and organisation 
  • advise on the right marketing and disposal strategies, and 
  • prepare confidential information memorandum.

Investor sourcing:

  • Identify potential investors for bilateral deals or public tenders, and
  • Target specialist investors for specific sub-portfolios/tranches.

Execution / completion of sale:

  • Manage the entire portfolio sales process.
  • Structure transactions.
  • Design appropriate bidding and sales procedures.
  • Oversee investor contact, including investor invitation and investor qualification.
  • Evaluate investment proposals.
  • Negotiate detailed terms, and
  • Coordinate the involvement of legal and other advisers.

Post-deal services

Loan portfolio recovery assessment and management

  • Manage the loan collection process.
  • Advise on loan servicing set-up issues, and
  • Advise on issues that impact the collection process.

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Our experience

China Orient AMC:

  • Sell-side financial advisor on China’s first ever NPL portfolio sale.
  • Portfolio size: US$D225m

Cinda AMC Qingdao/Tianjin Auctions:

  • Buy-side due diligence and advisory services.
  • Portfolio size: US$D845m and US$D610m

Foreign/Domestic NPL Investor Group:

  • Transaction sourcing, structuring, closing assistance and post deal loan servicing.
  • Portfolio size: US$D225m

China Orient AMC

  • Sell-side financial adviser on China’s first ever non-performing loan portfolio sale.
  • Portfolio size: USD225m.

Cinda AMC Qingdao/Tianjin Auctions

  • Buy-side due diligence and advisory services.
  • Portfolio sizes: USD845m and USD610m.

Foreign/domestic NPL investor group

  • Transaction sourcing, structuring, closing assistance and post-deal loan services.
  • Portfolio size: USD225m.

Great Wall AMC

  • Buy-side advisory and due diligence in relation to a negotiated portfolio sale.
  • Portfolio size: USD415m.

China Construction Bank

  • Buy-side due diligence services to multiple bidders in an asset auction.
  • Portfolio size: USD500m.

Huarong I Auction

  • Buy-side due diligence and advisory services.
  • Portfolio size: USD365m.

Huarong II Auction

  • Buy-side due diligence and advisory services to multiple bidders.
  • Portfolio size: USD2.8 b.

China Orient AMC

  • Vendor due diligence and valuation on eight non-performing loan portfolios.
  • Portfolio size: USD3.9b.

China Orient AMC

  • Loan servicing manager for investor group.
  • Portfolio size: USD225m.

A Big Four commercial bank in China

  • Sell-side financial adviser in relation to portfolio sale by auction.
  • Portfolio size: USD814m.

Cinda AMC

  • Buy-side due diligence services in relation to a negotiated portfolio sale.
  • Portfolio size: USD235m.

ICBC Ningbo Branch

  • Due diligence contractor in relation to securitisation of non-performing loan portfolio.
  • Portfolio size: USD340m.

 

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Of further interest

Contact us

Ted Osborn
Restructuring and insolvency Leader
Tel: +[852] 2289 2299
Email

Victor Jong
Partner
Tel: +[86] (21) 2323 3650
Email

Christopher So
Partner
Tel: +[852] 2289 2577
Email

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