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Policy, Private Equity

China Reform To Jointly Set Up $21B State-Owned Enterprise Reform Fund

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Guangzhou Industrial Investment Fund Management Company, China Reform Holdings Co., Ltd and Shanghai Pudong Development Bank Co. Ltd. have jointly established a RMB150 billion (US$21 billion) investment fund geared to invest and support reforms of state-owned enterprises, according to an announcement.

The first phase of the vehicle, named China Reform SOE Operating Investment Fund, will obtain capital allocations of RMB50 billion (US$7 billion) from the three state-owned entities.

Pudong Development Bank will contribute RMB30 billion (US$4 billion), while China Reform, an entity established by the State Council in 2012 tasked to manage bad assets from state-owned enterprises and restructure failing state-owned corporations, will contribute RMB10 billion (US$1.4 billion).

Guangzhou Industrial Investment Fund, a government guidance vehicle set up by the Guangzhou government to support industry upgrade in the city, will also contribute RMB10 billion (US$1.4 billion).

The newly established fund will seek to complete investments in three to five years. It aims to support the development of state-own enterprises and improve their operation efficiency by consolidation, securitization, deepening reforms and leveraging the capital markets.

China Reform has RMB150 billion (US$21 billion) in assets as of the end of 2015. It previously established a venture capital fund in Shenzhen’s Qianhai special economic zone with registered capital of RMB100 billion (US$15 billion) to support technology innovation at state-owned enterprises, especially those owned by the the central government.

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