China Life injects $315m into CITIC PE's RMB fund
China Life Insurance has injected RMB2 billion ($315 million) into CITIC Private Equity's renminbi-denominated fund. It comes after the insurance giant invested RMB1.5 billion in Hony Capital's most recent vehicle, a source close to the fundraising activity confirmed to AVCJ.
CITIC Private Equity is currently raising a new renminbi-denominated fund with a target size of RMB12 billion - the successor of Mianyang High Technology Industrial Fund closed in 2010. China Life's commitment will account for a little over 16% of the total fund corpus. The vehicle is expected to be closed in June, the source said.
Other investors include the National Council of Social Security Fund, financial institutions and Chinese enterprises.
The new fund will follow a similar strategy to that of its predecessor - financing and supporting the high technology projects and enterprises located in Mianyang, a science and technology-focused city in Sichuan province. CITIC Securities, China Gaoxin Investment Group and ZKC Environmental Gorup reportedly participated in the first fund, committing 20% of capital. The NSSF also contributed another RMB2 billion.
The China Insurance Regulatory Commission (CIRC) has approved the investment by China Life, which obtained a private equity investment license last year. Back in 2010, the CIRC opened the door for insurers to expand their investment portfolio into private equity and real estate.
Under the new regulation, registered insurance companies are allowed to inject up to 5% of their total assets, either directly or indirectly, into domestic private equity. It is estimated that the new rule could bring around RMB226 billion into the local private equity sphere.
China Life committed RMB1.5 billion to Hony Capital RMB Fund 2010, of which RMB880 million had been paid as at 30 December 2011. The remaining RMB620 million will be paid when called, according to the company's annual report.
In February, the People's Insurance Company of China (PICC) was said to set up an industrial fund worth RMB1 billion under its affiliate PICC Capital Investment Management. The name of the fund suggests it will focus on the defense sector. Ping An Insurance has also been permitted to allocate part of its capital to private equity investments.
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