China’s ‘first private investment firm’ ready for business

The state-run Xinhua News Agency said ‘China Minsheng Investment’ (CMI) which has a registered capital of 50 billion yuan (CNY) ($8.1 billion), has 59 shareholders representing a range of major private Chinese companies with combined assets of nearly 1 trillion yuan ($163 billion).

Chief executive officer Li Huaizhen told Xinhua that Shanghai-based CMI planned to set up offices in London and Hong Kong, “through which it seeks to cooperate with overseas financial institutions over investment and financing”.

CMI’s shareholder firms are drawn from a range of sectors including machinery manufacturing, information technology, asset management, environmental protection, power generation and e-commerce. Xinhua said the most shares any single company can own in CMI are 2%, with a minimum stake of 0.6%.

Li told Xinhua that CMI “would put an emphasis on China's domestic market, carefully choosing industries based on China's economic outlook and carrying out investment in good projects”.

Until CMI’s launch, the nation’s sovereign wealth fund, China Investment Corp, was the only major “national-level investment company”, Xinhua said.

A senior economist with government think tank the China Center for International Economic Exchanges, Wang Jun, told Xinhua that CMI would play a “significant role in stabilising confidence” in China and “spurring private investment”.

Wang said Chinese investment had “relied heavily” on the government and state-owned enterprises (SOEs) for too long, which was “unsustainable given increasing debt incurred by the SOEs and local governments”.

In its annual report for 2013, the China Banking Regulatory Commission said there were 3,949 banking institutions in the country. CBRC pledged initiatives during 2014 to “deepen banking reform, open up and improve financial services and prevent financial risks, so as to continuously improve banking efficiency and service capacity”.

In July 2014, China approved the launch of three private banks as part of plans to extend financial reforms and open up the country’s banking sector.