China Sets Up CNY350 Billion Fund to Finance State Sector Overhaul
Yicai Global
/SOURCE : Yicai
China Sets Up CNY350 Billion Fund to Finance State Sector Overhaul

(Yicai Global) Sept. 27 -- China has launched a CNY350 billion (USD52.5 billion) fund to finance the overhaul of state-owned enterprises through mergers and acquisitions, restructuring and overcapacity cuts, an official at the fund's manager told Yicai Global.

The China State-Owned Enterprise Restructuring Fund was set up by China Chengtong Holdings Group Ltd. at the behest of the State-Owned Assets Supervision and Administration Commission, Beijing-based Chengtong Holdings, which will manage the fund, said on Sept. 25.

It is the second fund SASAC has launched recently to reform the country's massive state sector. The CNY200 billion State-Owned Capital Risk Investment Fund was set up last month by China Reform Holdings Ltd. New research from Bloomberg Intelligence shows that if China's SOEs were a country, they would rank as the world's fourth-largest economy. Reforming a state sector of that size is a tall order.

Apart from China Chengtong, many state enterprises such as the Postal Savings Bank of China Ltd. have also contributed to the new fund, which has a corporate governance system guided by SASAC and will use a market-based approach, the official said. It will have a board of directors, one for supervisors, and will hold shareholder meetings.

The fund will use investment approaches such as equity, sub-fund, and bond investment, the official said. Its four major investment fields comprise significant strategic investment, transformation and upgrading, M&As and restructuring, and asset management.

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