Sinochem Capital Investment Management, an investment platform of Chinese state-run conglomerate Sinochem Group, is entering into an agreement to launch a billion-yuan fund for investments in the fields of new energy, new materials and electronic chemicals.
The new fund is targeting to secure 1 billion yuan ($143 million) in capital commitments and to invest no less than 80 per cent of the total capital in new energy, new materials and electronic chemicals, shows recent documents filed with the Shanghai stock exchange.
Sinochem Capital will serve as a limited partner to inject as much as 200 million yuan ($29 million) into the fund, while Hubei Xingfa Chemicals Group, which specializes in the development of fine phosphorus chemical products, might to put 300 million yuan ($43 million).
A five-billion-yuan ($717 million) government-guided fund in central China’s Hubei province, and another government-backed fund in Yichang city located at northern Hubei, will pour up to 195 million yuan ($28 million) each into the new fund as limited partners. In return, the fund will be required to invest at least 60 per cent of capital in companies in Hubei province and no less than 40 per cent of capital in Yichang city, according to the documents.
The investment vehicle is “an important step to incubate and develop strategic emerging industries like new chemical materials and electronic chemicals,” said Xingfa Group, one of the proposed limited partners, in a document filed on Wednesday.
Xingfa Group noted that the fund is still under the preparatory period and is yet to seal formal investment agreements with related parties.
Once launched, the fund could write a cheque at up to about $29 million, or 20 per cent of the fund size. The investment platform aims to make 500 million yuan ($72 million) ready for investment upon its inception and to collect the rest 500 million yuan within the following 12 months.
An investment management company, which counts Simochem Capital as a majority shareholder with a 40 per cent stake, will manage the fund after a capital injection of 10 million yuan ($1 million).
Sinochem Group, founded in 1950 and headquartered in Beijing, primarily engages in the production and trading of chemicals and fertilizer, as well as the exploration and production of oil. The company recorded 591.1 billion yuan ($84.84 billion) in revenue and 489.7 billion yuan ($70.28 billion) in total assets under management (AUM) in 2018.