The establishment of four private equity funds has got the
go-ahead from the country's top economic planner, according to
highly-placed sources.
If, as expected, they are approved by the State Council, the
funds will provide easier financial access to firms and small
businesses in the energy, innovative manufacturing and high
technology sectors.
The only private equity fund being operated now is the Bohai
Industry Investment Fund.
According to one source, the four funds - Guangdong Nuclear Power and New Energy Fund,
Shanghai Financial Fund, Shanxi Coal Fund, and Sichuan Mianyang High Technology Fund - had
applied to the National Development and Reform Commission to raise
80 billion yuan (US$10.3 billion), or 20 billion yuan (US$2.57
billion) apiece.
Ma Jihua, deputy department head of the NDRC's Finance
Department, would not comment on the issue.
However, another well-placed source said Guangdong Nuclear Power
Group originally planned to apply for 10 billion yuan (US$1.3
billion) but when the NDRC decided to add new energy to the list of
sectors targeted to provide financing, it raised the amount to 20
billion yuan. And the name of the fund was changed from Guangdong
Nuclear Power Fund to Guangdong Nuclear Power and New Energy
Fund.
According to experts, the Bohai fund provides efficient
fund-raising channels for firms that have difficulty acquiring bank
loans in the Binhai New Area of Tianjin, an economic center in North
China.
Sponsored by six domestic financial institutions and companies
last December with a capital of 6 billion yuan (US$773 million),
the Bohai fund focuses mainly on manufacturing, transportation and
energy enterprises in the Binhai New Area of Tianjin and other
areas around the Bohai Bay.
In Tianjin yesterday, a senior central bank official said China
should make greater efforts to develop private equity funds.
Addressing the ongoing First China International Private Equity
Forum, Wu Xiaoling, vice-governor of the People's Bank of China
(PBC), said a multiple-tier capital market including private equity
funds is imperative.
She said the country's capital market has "two soft ribs" - the
corporate debt market and the private equity market.
According to official figures, by December 2006, investments by
private equity funds in China reached 13 billion yuan (US$1.67
billion).
(China Daily June 8, 2007)