China's top economic planner has approved the creation of Shanghai's financial industry investment fund management firm, which is expected to raise 20 billion yuan (US$2.93 billion) to invest in financial institutions.

An asset-management firm to manage funds investing in financial institutions before their public listing will be formed by Shanghai International Group, the city government's investment arm, and China International Capital Corp, Oriental Morning Post reported yesterday, citing unnamed sources.

The National Development and Reform Commission gave the nod to the plan for the fund management company and more regulatory approval is needed before the company is officially set up.

The fund will raise an initial 8 billion yuan and is expected to manage funds of 20 billion yuan, the report said.

Officials at the Shanghai Financial Services Office, the city's financial authority, were not available for comment yesterday.

The city is building itself up into a world financial center and becoming a hub for equities investment in China is part of the blueprint.

In August, Shanghai released its guidelines on equities investment as the third Chinese mainland city vying to be an equity investment center, following Beijing and Tianjin.

Equity investment companies can help Shanghai to shift its economic structure into an advanced manufacturing and modern services industry, Vice Mayor Tu Guangshao said in August.

The State Council has given the go-ahead for the Shanghai fund in September 2007 to be established as the second industry-investment fund.

(Shanghai Daily February 5, 2009)