By P.R. Venkat

China Huarong Asset Management said some large Chinese financial institutions have agreed to invest in the distressed asset manager, which is expecting nearly $16 billion of losses for 2020.

Citic Group, China Insurance Investment Co., China Life Management, China Cinda Asset Management are among the investors that have signed an investment agreement, the state-backed asset manager said late Wednesday.

"If the potential strategic investment is implemented, it will effectively replenish the company's capital, further consolidate the company's foundation for sustainable operations, and ensure that the company meets regulatory requirements," China Huarong said.

Huarong was established in 1999 along with three other similar companies to take over the bad debt of China's biggest state-owned banks. The company subsequently expanded into other businesses including securities trading and commercial lending.

The asset manager has had recent troubles. In January, Huarong's former chairman Lai Xiaomin was executed after pleading guilty to bribery and corruption. Shares of the company have been in suspension since April pending publication of its 2020 results.

Separately, Huarong said late Wednesday that based on preliminary calculations, it expects 2020 losses of 102.90 billion yuan ($15.87 billion) compared with a net profit of CNY1.42 billion in the previous year.

Huarong blamed the poor performance on Mr. Lai's conduct as well as Covid-19.

"In 2020, as the trial against former chairman Lai Xiaomin for bribery, embezzlement and bigamy commenced and the sentence was pronounced, the group constantly cleared and disposed the risk assets caused by his aggressive operation and disorderly expansion during his tenure," it said.

Huarong said its operating results were also significantly affected due to the pandemic, which caused the quality of some of its assets to deteriorate at a quicker rate.

"After the comprehensive review and assessment of risks, the company had made provision for credit impairment loss," it said.

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

(END) Dow Jones Newswires

08-18-21 1953ET