Guangzhou Industrial Investment Fund Management Company (Guangzhou Fund), China Reform Holdings Co., Ltd and Shanghai Pudong Development Bank Co. Ltd. have jointly established an RMB150 billion (US$21.7 billion) investment fund. geared to invest and support reforms of state-owned enterprises.
According to details announced, this new is fund geared towards financially supporting reforms of state-owned enterprises (SOEs) in China. With the first phase investment of RMB 50 billion, it plans to complete the deployment of capital within a period of three to five years, in accordance with the fund operations mandate.
The new vehicle and its fund management company will be registered in Guangzhou. This new vehicles’ first phase – China Reform SOE Operating Investment Fund – has seen Shanghai Pudong Development Bank invest RMB 30 billion, China Reform Holdings invest RMB 10 billion and the Guangzhou Industrial Investment Fund invest RMB 10 billion on behalf of the Guangzhou Municipal People’s Government.
China Reform Holdings was established in 2012 by the State Council to manage bad assets among SOEs and restructure failing state-owned corporations. It has RMB150 billion ($21.7 billion) in assets as of the end of 2015.
China Reform previously established a venture capital (VC) fund in Shenzhen’s Qianhai special economic zone. This VC fund had a corpus of RMB100 billion (US$14.5 billion) to support technology innovation at SOEs, particularly those owned by Beijing.
The role of the Guangzhou Fund in this latest vehicle fund is to guide investments in fostering local economic development in the province, through the establishment of sub-funds, and the strengthen the role of SOEs in the province. Additionally, it is aimed at increasing capital gains from these enterprises.
The fund plans to participate in the enterprise asset securitisation, supply-side structural reform, mixed ownership reform, market-oriented restructuring and other projects through the equity investment, financial investment, and other means of financial engineering. This is aimed at supporting the development and streamlining of state-owned enterprises to improve efficiency and enhance their asset value.