Bohai Industry Investment Fund, China's first locally-invested
private equity (PE) fund, announced Friday it has invested 1.5
billion yuan (200 million U.S. dollars) in a state-owned steel pipe
producer in the northern city of Tianjin.
The investment, made in the Tianjin Pipe (Group) Corporation,
was the fund's first transaction since it was established upon
approval by the State Council in December 2005, at the Binhai
District of Tianjin, which is spearheading China's financial
reform.
"It (the investment) will help the firm ease long-term
dependence on bank loans, standardize its financial network, and
upgrade its capital structure," said Meng Hao, director for the
international finance center at the Tianjin University of Finance
and Economics.
The steel pipe producer, also based in Binhai, is China's
largest seamless steel pipe producer, with its products exported to
72 countries and regions. It plans to go public in the first half
of next year.
Ou Wei, president of the fund management company, said: "The
transaction marks the beginning of stronger alliances between
Chinese PE funds with industry leaders."
He refused to reveal the amount of equity he gets in the
company.
PE fund, a major investment channel along with bank loans and
IPOs,is mainly for companies with high growth potentials before
they are listed in stocks. Statistics show global PE funds have
accumulated to about 738 billion U.S. dollars.
In China, the fast-lane development of businesses has led to
high demands for the funds.
A study patronized by three organizations including Xiamen
University, shows international PE investors, including the world's
top four -- Black Rock, Carley Group, KKR, and Texas Pacific Group
-- were involved in 129 cases of investment in the Chinese mainland
by the end of last year, with a total value of 12.97 billion U.S.
dollars.
"Although Chinese PE funds started out late than international
competitors, we kicked off on a good start, and it's actually
taking off," said Ma Jun, general manager of the fund.
"As a 'local' fund, it breaks free of limitations set for
foreign investors, and more importantly, it doesn't arouse concerns
over the State industry safety," he added.
Bohai Industry Investment Fund, with a planned size of 20
billion yuan, raised six billion yuan at the first phase in last
December. Its major sponsors include 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.
(Xinhua News Agency November 3, 2007)
