NSSF to expand investments in state-owned enterprises

Under Chinese regulation, the NSSF is allowed to commit up to 20% of its funds to direct investment in SOEs. A maximum of 10% can be channeled into private equity and venture capital funds, some of which invest in state-owned companies with growth potential, Dai told Xinhua News Agency.

"In the future, NSSF will continue to support SOEs' business restructuring, mergers and acquisitions, as well as their development in emerging industries and their 'going global' strategies," said Dai. "The pension fund will explore innovative ways to cooperate with SOEs, including the purchase of their preferred stocks."

Wang Zhongmin, the fund's vice chairman, told media last month that the NSSF has only put 2.2% of its capital into private equity and venture capital, leaving considerable room to increase commitments to the asset class.

In June 2009, the central government decreed that any company with an element of state ownership must transfer to the NSSF shares equivalent to 10% of those being sold through an IPO on the domestic bourses. Aside from adding to the NSSF's coffers, the mechanism is seen as having a stabilizing effect on the capital markets because the pension fund is seen as a long-term investor.

The NSSF has already generated RMB210 billion ($33.34 billion) through mandatory share transfers, Dai added. He expects the fund would to expand its asset to RMB1.5 trillion by 2015, up from RMB869 billion in 2011.

The NSSF has so far committed close to RMB20 billion ($3.2 billion) to 10 venture capital and private equity firms across 13 funds. About RMB12 billion of this has already been invested. Last year, the pension fund has invested in five new funds managed by five GPs, including CDH Investments.

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• Topics
• Greater China
• NSSF