China launches $21.7b SOE restructuring fund

The first phase of the fundraising amounts to RMB50 billion, which will be deployed over 3-5 years in initiatives such as asset securitizations, mixed-ownership reforms and market-oriented restructurings, according to a statement. The primary objective is to promote economic development within Guangzhou and Guangdong province by helping SOEs become more efficient, initiating industry consolidation, and stimulating private sector investment.

Shanghai Pudong Development Bank will contribute RMB30 billion to the first phase, with Guangzhou Industrial Investment Fund Management and China Reform Holdings each putting in RMB10 billion. China Reform Holdings was established in 2012 by the State-owned Assets Supervision & Administration Commission (SASAC) to participate in the reform of struggling SOEs. It held RMB150 billion in assets as of the end of 2015.

China private equity fundraising reached a record $79.7 billion last year, with 80% of commitments going into renminbi-denominated vehicles. State-sponsored funds mandated to stimulate economic growth – through restructuring SOEs and accelerating the development of the “new economy” – figured prominently. Between July and September of 2016, three state-sponsored renminbi funds together received around $39 billion.

They included the China State-owned Enterprises Restructuring Fund, which launched with a target of RMB350 billion and initial contributions of RMB131 billion provided by nine SOEs. SASAC said it would appoint a professional manager to operate the vehicle, with a remit to drive industrial upgrades and structural reform.

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• Topics
• Greater China
• Renminbi fund
• Fundraising
• China
• Renminbi