Kleinwort Benson fund in US$13m joint venture
KLEINWORT Benson's China Investment and Development Fund (CIDF) has set up a telecommunications products joint venture with Gaomin Fada Group in Qingdao.
The move is the latest example of the growing foreign interest in China's telecommunications industry, which is set to grow rapidly.
China plans to install more than 40 million kilometres of telephone lines each during the next 10 years.
The demand for copper-based telephone cable cannot currently be met from within China and substantial imports are required to make up the shortfall.
CIDF is listed in London and managed in Hong Kong by Kleinwort Benson China Management.
The latest investment, the sixth already made by CIDF, brings its total investment in unlisted joint ventures on the mainland to about US$32 million.
The Weifang Circum-Pacific Communication Cable Co will be 38.3 per cent-owned by CIDF, with a 61.7 per cent stake being held by Gaomin Fada Group.
The joint venture will have assets of an estimated $13.04 million. CIDF will invest $5 million in cash, while Gaomin Fada Group will contribute a share of $8.04 million in assets and cash.
The new company will initially make telecommunications cable for both the domestic and export markets and it may later make optic-fibre cable in loop form.
Its factory, near Qingdao in Shangdong province, will be fully operational from June.
CIDF has already invested in Shanghai International Storage Battery, Jiangxi Ceramics, Upsonic (BVI), Jinhua Polyester Fibre and Qufu Sankong Brewery.
Merchant bank Kleinwort Benson says that it expects these companies will ultimately be put in line for public listing.