The engine for the C919 is on display at an aero exhibition in Beijing. (Lan Di/for China Daily)
Number of orders for C919. (Photo/China Daily)
Commercial Aircraft Corp of China Ltd has put together multibillion yuan funds to support research and development after rolling out the C919.
Earlier this month, the latest round of funding for COMAC was announced when Huatai Asset Management injected 15 billion yuan ($2.25 billion) into the State-owned aircraft manufacturer.
This followed a 10 billion yuan fund put together in May by the Asset Management Association of China, and more than 40 private equity companies to finance projects between COMAC and its suppliers.
"The injection of capital is significant for the commercial aircraft industry in China," said Lin Zhijie, an aviation industry analyst and columnist at Carnoc.com, one of China's largest civil aviation web portals.
"The research and development of new products needs a large amount of money and these funds will have a profound and lasting impact on the growth of aircraft manufacturing," Lin added.
Huatai Asset Management, which is part of Huatai Insurance Company of China Ltd, will provide funding through a 10-year renewable debt investment plan.
Part of the deal allows COMAC to renew the agreement after the investment policy matures.
The 15 billion yuan fund will be used for R&D, as well as financing civil aviation projects by the aircraft corporation, and has been backed by the China Insurance Regulatory Commission or CIRC.
Still, this is the first time COMAC and a major insurance group have collaborated in what is one of the largest debt investment deals registered under the Insurance Asset Management Association of China.
Looking ahead, Huatai aims to wheel out funds from other insurance companies to better serve the "real economy", and will also provide more diverse services, such as debt and equity investment and financing, to COMAC.
"The debt investment plan marks a critical step in the support from insurance funds to the real economy and emerging strategic industries, which fits COMAC's need for initial investment," said He Dongfeng, chairman of the board at COMAC.
Indeed, there is significant growth potential in the aviation industry. Already China's only civil aircraft manufacturer has 600 orders for the C919, the largest passenger jet constructed in the country.
But investment is crucial at this stage, triggering the decision by the Asset Management Association of China and equity companies, including Qianhai Mergers and Acquisitions Funds, Redbud Capital and Rosefinch Investment, to inject finance into COMAC.
The move will help drive "growth" in the "upstream and downstream industrial chain".
More than 200 local companies are serving as suppliers and manufacturers for the C919, which has a staggering 100,000 components.
At first, the fund will be used for R&D of aircraft components, such as engines and electronic devices.
Lin, at Carnoc.com, is convinced this will make a huge impact on the industry and for domestic passenger aircraft, as well as other high-end manufacturing sectors in China.
