Caixin
Sep 26, 2016 06:28 PM
FINANCE

China Chengtong Creates $52.5 billion Fund Company

Photo: IC
Photo: IC

(Beijing) — State-owned investment management company China Chengtong Holdings Group Ltd. said Monday it is establishing a fund company to help finance and speed up structural reform at state-owned enterprises (SOEs).

China Chengtong, an investment company under the supervision of the State Council's State-owned Assets Supervision and Administration Commission (SASAC), said the fund company was founded on Sept. 22 by 10 central government-owned enterprises, with registered capital of 131 billion yuan. It said the fund will grow to 350 billion yuan ($52.5 billion).

China Chengtong, as a principal founding shareholder, provided 30 billion yuan. Postal Savings Bank of China contributed 50 billion yuan and China Merchants Group offered 200 billion yuan.

Other shareholders include China North Industries Group Corp.; Sinopec Group; Shenghua Group, a leading coal mining company; and China Mobile. Each will provide 5 billion yuan.

The fund company, named the "SOEs Structure Adjustment Fund," will engage in various investment strategies, including the direct purchase of equity shares of both listed and non-listed companies, as well as making investment on debt and underlying funds, according to the news release issued by China Chengtong.

The fund company, managed by China Chengtong, will be supervised by a fund coordination leading group set up by the SASAC.

Funds will be used to assist SOEs to upgrade their industrial structure and optimize their capital budgeting by making mergers, acquisitions or reorganizations. Target industries include manufacturing, electric power, steel, telecommunications and air cargo.

Money will also support military defense, petroleum and gas pipelines, and exploration of mining resources. It will also help "zombie companies" clear excess capacity, particularly in steel making, coal mining and cement industries.

Contact reporter Dong Tongjian (tongjiandong@caixin.com); editor Ken Howe (kennethhowe@caixin.com)

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