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Chinese regulator considers making brokerage PE pilot program full time

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A pilot program under which Chinese securities companies participate in private equity investment may be approved for full implementation. Huang Wenyuan, director of the department of institutional investors at the China Securities Regulatory Commission (CSRC), said the move was under consideration, China Daily reported.

The pilot program was launched in 2007 and 34 securities companies have been awarded licenses for private equity investment. According to the Securities Association of China, investments total RMB10.2 billion ($1.5 billion).

As it stands, investments must be made from the securities companies' own capital reserves. However, China International Capital Corp (CICC) last year tapped third-party investors to raise a $500 million US dollar-denominated fund through its Hong Kong unit. The broker is on course to announce a RMB1.5 billion ($231.5 million) first close on its debut renminbi-denominated fund, with a full target of RMB5 billion ($771.7 million). Investors are likely to include the National Council for Social Security Fund and China Development Bank.

Liu Zhao, executive director of the new renminbi fund, said that CICC expects private equity to account for 20%-30% of total revenue within five years.

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