By P.R. Venkat

China's top manager of distressed assets said it will raise over $6 billion in fresh capital from state-owned financial institutions, helping it avoid messy defaults and shore up its capital requirements.

China Huarong Asset Management Co. said late Wednesday that it will issue 39.22 billion domestic shares and not more than 1.97 billion H-Shares that will see it raise 42 billion yuan ($6.57 billion).

Five state-owned financial companies, including Citic Group, fellow bad-debt manager China Cinda Asset Management and an investment unit of China Life Insurance Co. , are among the investors that have agreed to subscribe to the shares, Huarong said.

Huarong is majority owned by China's Ministry of Finance and is the largest of the country's managers of non performing loans and other bad debt.

In August, the company said that it had a loss of roughly $16 billion in 2020 and warned that it fell short of regulatory requirement on financial strength.

The Beijing-based company blamed its past overexpansion and other problems on former Chairman Lai Xiaomin, who was executed after a court found him guilty of bribery and embezzlement. It also said the coronavirus pandemic and its negative impact on markets caused a swift deterioration in some of its assets.

"After having consulted with professional institutions, studied and tried multiple methods, upon careful consideration of the company, it is of the view that the issuance is the only practical measure to solve the capital insufficiency difficulty of the company and to satisfy the regulatory requirement," Huarong said Wednesday.

Write to P.R. Venkat at venkat.pr@wsj.com

(END) Dow Jones Newswires

11-17-21 1724ET