Wen Jiabao

Princeling manager to exit citic securities

PUBLISHED : Wednesday, 13 June, 2012, 12:00am
UPDATED : Wednesday, 13 June, 2012, 12:00am


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Liu Lefei, a senior executive at Citic Securities, China's No 1 brokerage, is set to leave to pursue personal interests, amid growing concern on the mainland about children of top government leaders often taking up important positions at large state-owned enterprises.

People with direct knowledge of the matter told the South China Morning Post yesterday that Liu had resigned as chairman of Beijing-based Citic Private Equity Funds Management, a unit of Citic Securities. Wang Dongming, chairman of the parent company, would temporarily become chairman of both the private equity arm and Citic Securities, which is listed in Hong Kong and Shanghai, the people said.

A spokesman for Citic Securities confirmed to the Post yesterday that Liu had recently stepped down as chairman of the private equity arm but would remain chief executive of the firm. Industry insiders say the arrangement could be temporary and aimed at helping the private equity company through a transitional period, reassuring its investors that it is business as usual.

Liu, 39, is the son of Liu Yunshan, a powerful Communist Party official in charge of ideology and propaganda. The elder Liu is also a member of the Politburo, the party's top leadership group. He is widely tipped to become one of the members of the Politburo Standing Committee - the party's innermost circle of power - in the once-in-a-decade reshuffle of top leadership in autumn.

Some of the older Politburo members will retire, but Liu Yunshan is widely expected to retain his Politburo seat in the new administration.

'I think the message here is clear and important - if you want to keep your day job as a senior government official, perhaps your children would be better to stay away from those key jobs at big state-owned enterprises' to avoid any suggestion of privilege, said one of the people familiar with some of the top leaders' thinking.

Liu Lefei joined Citic's private equity arm in late 2008, when the billion-dollar fund had just begun to raise money. Despite his youth, Liu has built a reputation as a star asset manager. He is known for landmark deals including the successful US$3.1 billion joint bid by China Life, where he was chief investment officer, and Citigroup for control of Guangdong Development Bank in 2006.

Many children of top Chinese officials have been active in the capital markets and some of them have been hired by the world's leading investment banks to help them explore business opportunities on the mainland. Others often take senior jobs at big state-owned enterprises, or run their own private equity funds.

Such children, so-called princelings, have caught the eye of the top leadership and become lightning rods for public debate as citizens call for more equal work opportunities.

Earlier this year, Winston Wen, also known as Wen Yunsong, the son of Premier Wen Jiabao, was appointed chairman of state-owned telecommunications firm China Satellite Communications. The appointment ignited debate, in particular among young people struggling to find decent jobs after graduating. Wen is expected to retire officially next year as part of the leadership reshuffle.

'I have to say some of the princelings are doing a pretty good job in their roles. They are well-educated and, of course, they have all kinds of connections,' said another person who asked not to be named.