Funds News
- China's first industry investment fund launched in Tianjin
Date: 2-Jan-2007 Sources: (Xinhua Online)
China's first industry investment fund of six billion yuan (770 million U.S. dollars) was inaugurated in Tianjin, a north China economic center, on Saturday.
The Bohai Industry Investment Fund will reach 20 billion yuan within 15 years and provide easy access to funding for small businesses and firms in the modern, manufacturing and high-technology fields.
The first phase of six billion yuan was jointly funded by six domestic financial institutions and companies, including the National Council for Social Security Fund of China, BOC International (China) Limited, TEDA International Holding Co., Ltd., the Postal Savings Bank of China, China Life Insurance Company and Tianjin-based Jinneng Investment Share-holding Co., Ltd..
They invested one billion yuan each.
The Bohai Industry Investment Fund will initially finance mainly innovative manufacturing enterprises and transportation and energy projects in the Binhai New Area of Tianjin and other areas around the Bohai Bay, including Beijing, Tianjin, Shandong and Liaoning provinces.
The Binhai New Area is a national pilot reform base listed in the country's development plan for 2006 and 2010. The government is endeavoring to turn the area into its third economic base after Shenzhen and Shanghai's Pudong.
Economists and experts said the establishment of the Bohai fund indicated China was stepping up the development of industrial investment funds and exploring new channels for direct fund raising.
Currently, the proportion of direct financing stands at less than 10 percent and is done through a few channels including the stock market, issuance of corporate bonds and short-term fund-raising bonds.
Many enterprises have to scramble for bank loans.
With money raised indirectly, enterprises would suffer a high ratio of liabilities, heavy financial burdens, low innovation capabilities and weak capabilities to hedge risks, said Dai Xianglong, city mayor of Tianjin.
The Bohai fund was a low-cost but efficient channel for fund-raising for firms that face difficulties in obtaining bank loans, experts said.
Industry investment funds would also diversify investment channels for Chinese citizens whose combined bank savings totaled1.4 trillion yuan and who could only invest in the stock market and buy state treasury bonds, said Meng Hao, head of the International Financial Research Center under the Tianjin University of Finance and Economics.
More industry investment funds were expected to be launched, said Dai, adding they would drive the drafting of Chinese law in this field.
Other industrial funds, including energy industry investment funds, have applied for licenses.
Dai said the Bohai Industry Investment Fund would be included in the scheme of comprehensive reforms in the Binhai New Area and would be further developed.
The Bohai Industry Investment Fund Management Company, with a registered capital of 200 million yuan, was also inaugurated on Saturday to oversee the use of the Bohai fund.
The National Development and Reform Commission gave the go-ahead to the establishment of the fund in December last year.
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