Chinese state-owned conglomerate Yuexiu Group, and the People’s Insurance Company of China (PICC), which is controlled by the central government, have jointly set up their first industry investment fund at 3 billion yuan ($422 million) for investments in the Greater Bay Area.
The new fund is the first investment platform to be followed by the launch of a series of flagship funds between the two parties for investment opportunities in the Greater Bay Area. The vehicles will amount to a combined capital pool of 10 billion yuan ($1.41 billion), according to a statement on Thursday.
The Greater Bay Area refers to a Chinese government scheme signed in July 2017 to link Hong Kong, Macau, and nine southern Chinese cities including Guangzhou, Shenzhen, and Zhuhai, into an integrated economic and business hub.
The region, which Beijing considers as a potential rival to Silicon Valley in the US, housed a population of 71 million and had a combined gross domestic product (GDP) of over $1.64 trillion at the end of 2018 – roughly equivalent to that of Australia.
The maiden fund will be managed by Yuexiu Industrial Fund, which was established by Yuexiu Group in August 2011 and had over 60 billion yuan ($8.44 billion) in assets under management (AUM) as of December 2018, shows the company website.
Besides the industry investment fund series, the two deep-pocketed state-owned companies also plan to create RMB and USD-denominated funds of funds (FOFs) in the future to back companies in “emerging industries with strategic importance” in the Greater Bay Area.
The 3-billion-yuan fund is the latest vehicle targeted towards a growing investment sentiment – predominantly among funds with close links to the government – in favour of the development of the much-highlighted Greater Bay Area.
Earlier this month, Hong Kong-based financial services group China Everbright Limited joined hands with an array of financial companies to launch a new FOF for investments in the region. The fund, which reached the first closing at 1 billion yuan ($143 million), focuses on the next-generation IT, healthcare, consumption, media and entertainment, and advanced manufacturing sectors.
CICC Capital, the investment unit of China International Capital Corporation Limited, also teamed up with state-owned China Taiping Insurance Group this January to launch a $1 billion fund for the Greater Bay Area.
In November 2019, a group of state-backed companies including Yuexiu Industrial Fund set a goal to raise 500 million yuan ($71 million) for a Greater Bay Area-focused industry fund.