National-level privately funded investment firm begins operation

China Minsheng to support economic restructuring

A national-level private capital-backed investment firm, the first of its kind in China, began operation on Thursday, the -Xinhua News Agency reported, a move that analysts said may enhance private investment amid a weakening economic recovery.

The new firm, China Minsheng Investment, won endorsement from the State Council in April.

With a registered capital of 50 billion yuan ($8.12 billion), the firm is composed of 59 large private enterprises from fields such as machine manufacturing, metallurgy, information technology, new energy and e-commerce, said the Xinhua report.

Investors' stakes in the firm range from 0.6 percent to 2 percent, which is conducive to optimizing the utilization of the resources and strengths of different stakeholders, Li Huaizhen, president of China Minsheng Investment, said at an inauguration ceremony in Shanghai.

A Dow Jones article Thursday listed home appliance retailer Sunning Commerce Croup, property developer Yida Group and Giant Investment Co among the investors.

The establishment of the firm comes at a time when the investment from the non-public sector is losing momentum amid a faltering recovery of the economy.

In the first seven months of 2014, the country's private fixed-assets investment growth cooled to 19.6 percent year-on-year from 20.1 percent registered in the first half, according to data from the National Bureau of Statistics (NBS).

The new private investment firm with a dispersed ownership structure could ease individual investors' concerns about risks, specially involving projects beyond their own industries, injecting vitality to the private sector, Xu Hongcai, director of the Department of Information under the China Center for International Economic Exchanges (CCIEE), a Beijing-based think tank, told the Global Times on Thursday.

Prior to the establishment of China Minsheng Investment, China Investment Corporation, the nation's sovereign wealth fund that had around $650 billon of assets under its management by the end of 2013, was the only major national-level investment firm.

The new private investment firm will also push overseas expansion of the nation's private companies, said Xu of the CCIEE, who suggested the establishment of a mechanism which ensures that investment policy-making remains under the purview of professional teams.

In addition to domestic investment, the new firm envisions investing overseas, with plans to set up operations in London, focusing on merger and acquisition activity. Furthermore, it aims to establish an investment bank in Hong Kong, according to the Dow Jones report.

The new firm is also purporting to venture into areas such as transportation, telecommunications and public utilities that have long been the realm of State-owned enterprises (SOEs), amid the central government's push for mixed-ownership reform of the SOE sector.

The SOE reform is a significant part of the country's economic restructuring.

While the new giant private investment firm is seen as spearheading the revitalization of the private sector as a whole, the small-scale private investment market is still in disorder, noted Shan Dong, president of the Private Economy Academy of Zhejiang Province.

A rising number of smaller investment firms are operating in Zhejiang, a hub for the country's private economy, but not many of them have a clear idea about risk management, Shan told the Global Times on Thursday.

As for the involvement of private capital in the nation's mixed-ownership reform, he said the outlook is not very clear as State capital remains firmly in control of some strategic industries.