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SOEs are major investors in yuan PE fund

By Yin Mingzhe (chinadaily.com.cn)
Updated: 2011-06-30 17:18

State-owned enterprises (SOEs) are becoming the major limited partnership in yuan private equity (PE) funds, the International Financial News, a newspaper affiliated to the People's Daily, reported Thursday, citing a report released by the Zero2IPO Group.

The report said the SOEs are actively involved in PE because such investment fits the national policy to promote industrial development.

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"During the 12th National Five-Year Plan (2011-2015), equity investments will play an important role in restructuring SOEs, integrating the resources and upgrading the industries," the report added.

From 2006 to 2009, 483 venture capital enterprises registered with the National Development and Reform Commission. Investments by State-owned institutions accounted for nearly 50 percent of the LP's paid-in capital and showed a significant rising trend, according to the China Venture Capital Annual Report 2010.

SOEs have sufficient capitals at hand to invest allowing them to become the major investors or fund promoters in yuan funds. Recently SOEs prefer to promote the PE funds because they can not only directly control the management of funds but also understand the problems such as internal incentive mechanisms, decision making, human resources and fundraising, the newspaper reported.