CITIC Securities Co said today it had won regulatory approval to start private-equity business on a trial basis, becoming the first mainland broker allowed to invest in firms before their initial public offerings.

The Beijing-based broker has gained approval from the China Securities Regulatory Commission to spend 831 million yuan (US$110.5 million) to set up Jinshi Investment Co, it said in a statement to the Shanghai stock exchange.

Jinshi Investment can only use its own capital to conduct pre-IPO investments in private enterprises, according to the statement. It didn't say when the business will kick off.

The CSRC said late last year it would let qualified domestic brokers invest in non-public companies similar to private equity ventures to help them boost returns.

The equity investment by brokerages will be limited to firms that are on track to launch IPOs and brokers should exit within three years, media reports have said, citing industry sources.

Citic Securities in late August raised 25 billion yuan selling additional shares to investors as part of efforts to collect funds for expansion. The broker also has said it would invest 100 million yuan to buy control of Shenzhen Gold Bull Futures Brokerage Co.

Separately, China International Capital Corp also said yesterday it gained a private-equity license from the CSRC but didn't disclose how it would start the business.

(Shanghai Daily September 11, 2007)