China launches $52.5b SOE restructuring fund
China has launched a RMB350 billion ($52.5 billion) private equity fund to restructure state-owned enterprises (SOEs) as part of efforts to improve operational efficiency and encourage industry consolidation.
The China State-owned Enterprises Restructuring Fund has initial registered capital of RMB131 billion provided by nine SOEs. China Chengtong Holdings Group, an investment company backed by the State-owned Assets Supervision & Administration Commission (SASAC), took the lead in launching the vehicle.
Other investors include Postal Savings Bank of China, China Merchants Group, China Mobile, China North Industries Group, and China Petroleum & Chemical. The fund will be managed by a professional investment firm appointed by SASAC, according to a release posted on Chengtong's website.
The fund will be used to boost the competitiveness of SOEs in terms of industry upgrades and structural reform. Key investment areas include assets that deemed important to national security and the overall economy, such as strategic reserves of natural resources, oil and gas pipelines, power grids and telecommunication infrastructure, according to a SASAC document cited by Reuters.
This is the second mega-fund supported by SASAC with a view to reforming SOEs. Last month, Chinese Reform Holdings Corporation (CRHC), a state-owned asset manager backed by SASAC, launched a government-backed venture capital fund with a target of RMB200 billion. It will invest in innovative domestic companies, encouraging SOEs to adopt new technology and supporting an industry upgrades.
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