To complete the goal, the municipal government has worked out a plan to back up the fast-growing PE investment industry in the city, disclosed an official at the Beijing Financial Bureau on September 28. The city saw four PE investment cases in the second quarter of the year, with a sum of USD 4.858 billion, according to statistics by Beijing-based Zero2IPO Group.
As its first step, Beijing plans to set up a CNY 10 billion private equity investment fund that will bankroll projects with great potential. The fund, aiming for CNY 5 billion in the initial fundraising, is about to finance three CNY 5 billion investment guidance funds to be launched in the city, said Zhan Long, head of the financial market division under the Beijing Financial Bureau.
Apart from the CNY 10 billion PE fund, the three guidance funds will raise capital from other fund management firms, with one focusing on the high-tech sector, one targeting the environmental protection sector, and the remaining one eyeing the cultural sector, according to Mr. Zhan.
The government will try to build up a platform or a channel that will make it easier for companies in the three most critical sectors to replenish their capital base, explained Mr. Zhan. At the moment, a slew of PE funds find it difficult to seek for projects while companies have trouble courting for PE investors.
Additionally, the CNY 10 billion PE fund will team up with outstanding PE fund management companies to roll out a series of PE funds in the city, said Mr. Zhan, noting that the fund of fund is likely to come into existence around the weeklong National Day holiday.
"The municipal government is likely to lick into shape the detailed scheme for the launch of these PE funds by the end of 2009," said Mr. Zhan, "a PE fund management firm will be formed to take charge of the to-be-launched funds as the next step."
Notably, Beijing plans to put into place a series of powerful measures to keep the PE funds away from potential risks, according to Mr. Zhan.
Aggregate 44 PE and venture capital (VC) investment cases involving CNY 5.83 billion took place in Beijing in the first half of 2009, accounting for 23.91% and 83.31% of the total in the country, respectively.
(USD 1 = CNY 6.83)
