Private equity funds are popular in the United States and other western countries or regions for a decade। China is catching up with the trends too. Since late 2006, China has established 6 government-backed private equity funds, and China is actively considering approving 4 more state-funded private equity firms. We list blow the current existing 6 state PE firms as follows with some notes:
Bohai Industrial Investment Fund(the first yuan-denominated private equity fund was created in China in late 2006, focusing on domestic buyout deals)
Shanghai Financial Industrial Investment Fund(one of the five yuan funds approved in 2007)
Shanxi Coal Energy Industrial Fund(one of the five yuan funds approved in 2007)
Guangdong Nuclear Power Industrial Investment Fund(one of the five yuan funds approved in 2007)
Sichuan Mianyang High-Technology Industrial Fund(one of the five yuan funds approved in 2007)
China-Singapore Hi-tech Industrial Investment Fund(one of the five yuan funds approved in 2007)
The State Council is pending approval to four new government-backed private equity funds to enhance the country's industrial sector of water treatment, shipbuilding, equipment manufacturing and urban infrastructure। Huayu Water Industry Funds is one of them to raise 30 billion yuan to finance water treatment projects in the major western cities of Chengdu and Xian.
Notes:
(1)the five yuan funds approved in 2007 are worth a combined 56 billion yuan.
(2)the government-backed funds have their own edge because they are more resourceful in their home market, therefore, those state funds are a challenge to the big-name global private equity firms.
(3)since the five yuan funds all have a geographical focus, however, Beijing may also have reasons to worry about regional bias. The central government is worried that governments at lower levels would interfere in the running of the funds, which are intended to be profit-driven.
(4)top officials are worried as well that cash-rich funds would not do well under government directives.
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