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37.Bohai Industrial Investment Fund offers an instructive trial to operation of RMB industry investment fund
http://www.tj-summerdavos.cn 2014-09-08 19:49

During recent years, the exposure of RMB industry investment fund is increasing. Starting from the Bohai Industry Investment Fund, a boom of constitution of industry investment fund, represented by the planning and building of regional industry funds in Guangdong Province and Suzhou, has begun to rise around China.

From launching to investing in the first project, the Bohai Industrial Investment Fund is providing precious operating experience for the development of local industry funds.

As an important exploration for Tianjin Binhai New Area in expanding direct financing channels, the first Chinese-invested industry investment fund, Bohai Industrial Investment Fund, was launched in Tianjin on December 30, 2006. It was 20 billion yuan in size and had raised 6.08 billion yuan with its initial placement. Investors include National Social Security Fund Council, National Development Bank, Postal Savings and Remittances institution of the State Post Bureau Post, Tianjin Jinneng Investment Company, etc.

Analysts contend that the constitution of Bohai Industrial Investment Fund is a tangible achievement from implementing the comprehensive reform and experimental development in Binhai New Area and is a result from the accelerated financial reform and innovation. It is a major breakthrough for the reform and innovation of China’s direct financing system. It starts a new era in the development of RMB industry investment fund.

The Bohai Industrial Investment Fund tops China in four areas. It is China’s first scale RMB industry investment fund, China’s first contract industry investment fund, China’s first industry investment fund for specific investors, and China’s first fully market-oriented industry investment fund.

As investing pattern is concerned, the Bohai Industrial Investment Fund takes the mature international experience as a reference. It selects high-quality enterprises after evaluating risks. Through participating in the management of target companies, it optimizes their governance structure, improves their operational and financial situations, helps them to create value, and at last, takes benefit from selling the shares it held.

The Bohai Industrial Investment Fund inked the first investment agreement with Tianjin Pipe Group Corporation Limited at the end of 2007, which marks the official operation of China’s first Chinese-invested industry fund. According to the agreement, the fund invested about 1.5 billion yuan in exchange of the stock of Tianjin Pipe Group Corporation held by Tianjin Pipe Group Corporation Limited.

Industry investment fund, often referred as private equity fund in foreign countries, is a funding pattern that is opposite to securities investment funds. It often involves the equity or quasi-equity investment to the unlisted companies with high growth potential. The fund company may get involved in the operation and management of the enterprises it invests. After those developing enterprises mature, the fund may achieve capital appreciation through share transaction.

Following the Pudong New Area of Shanghai, the Binhai New Area is China’s second comprehensive reform and experimental development pilot area. As part of China’s regional coordinative development program, the Binhai New Area has been incorporated into national development strategies and given the priority to act and experiment in financial reform and many other areas.

The whole process of constitution and investment of the Bohai Industrial Investment Fund has set a precedent in exploring the path for Chinese industry investment fund and expanding direct financing channels.

Source:Enorth.com.cn

Editor: Zhang Jialu
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