Chinese PE fund for ASEAN under way

$1 billion of fundraising completed; initial work involves infrastructure

NANNING - China's private equity (PE) fund of $10 billion for Southeast Asian countries has completed its first round of fundraising worth $1 billion and it expects its maiden project in infrastructure to take place by the end of this year.

"The fund's preparatory work has been done and we have already started looking at a batch of projects mainly in infrastructure and joint economic projects between China and members of the Association of Southeast Asian Nations (ASEAN)," said Zhu Hongjie, vice-president of the Export-Import Bank of China (Exim Bank), at a forum on the sidelines of the seventh China-ASEAN Business & Investment Summit.

Exim Bank and the nation's sovereign-wealth fund, China Investment Bank, jointly launched in April 2009 the government-backed PE fund, in which each party invested $300 million. The policy bank owns 52 percent of the fund management joint venture.

Zhu expects the fund's first project in infrastructure, which is among the key investment areas for the fund, to materialize before the end of 2010.

The fund is set to provide $50 million to $150 million of capital per project and only acts as the equity or quasi-equity investor, said Lu Yueping, deputy general manager of Exim Bank's special financing department.

The first $1 billion-fund, which was collected from major institutional investors, completed its fundraising and started operations as early as this March, Lu said.

ASEAN's infrastructure investment market has gradually opened up and provided abundant opportunities for Chinese investors. It will help boost economic integration between China and the region, said Wang Shengwen, deputy director-general of the department of outward investment and economic cooperation under China's Ministry of Commerce.

The sales volume of Chinese firms' overseas contracting projects that involved communications, railways and harbor construction in ASEAN countries in the first seven months of 2010 was up 23 percent to $6.4 billion from the previous year, Wang said.

Lu said the fund also targets projects in the energy and natural resources sectors, as China's demand for these remains large with the nation on track for rapid growth.

"We will start the second phase of fundraising when 70 percent of the first phase is used up We welcome institutions from other countries to join in the raising of these funds," said Lu, who refused to disclose the size of the second round of funding and when it will take place.

China and ASEAN have deepened their economic ties after their free trade agreement took effect in January.

Bilateral trade jumped to $211.3 billion in the first three quarters, up 44 percent from a year earlier.

China Daily

(China Daily 10/21/2010 page13)