Regional-level investment groups copying the Minsheng model to brave economic slowdown

Li Huaizhen, CMIG’s president, says he’s happy to partner with the newbies to jointly explore business opportunities

PUBLISHED : Friday, 21 October, 2016, 4:59pm
UPDATED : Friday, 21 October, 2016, 11:00pm

China Minsheng Investment Group (CMIG), the country’s premier private investment consortium, has spawned a batch of imitators, as regional-level investment conglomerates look to copy its ownership and management model to weather the economic slowdown.

Look-alike operations to CMIG have been set up in Jiangsu, Zhejiang and Guangdong provinces as wealthy firms and individuals work to combine their resources and business acumen to secure lucrative deals, said Li Huaizhen, CMIG’s president.

“After decades of development, privately-owned companies have realised that their combined efforts could breathe a new life into their growth,” he said.

“The rapid growth of CMIG already proves our business model is successful.”

The State Council approved the creation of the investment house in 2014, part of Beijing’s efforts to encourage the growth of privately-owned operations, while breaking up the monopolies of state-owned, often loss-making, juggernauts.

CMIG has registered capital of 50 billion yuan committed by 59 shareholders, and it has been deemed a success in combining the resources and expertise of large-scale, privately-owned companies as the country’s looks for new ways of maintaining economic growth.

There has been increasing concern within the private sector of rising labour costs, surging land prices, dwindling exports, and the difficulties in accessing funding.

Many smaller businesses have had to resort to the shadow-banking system to access capital, which often carry lofty interest rates, as the larger banks show a reluctance to extend them credit.

It is rumoured now that another high-profile CMIG-style investment conglomerate, backed by the government, is being planned to add further clout to the market, and is likely to focus on investments by local authorities and the financing mega infrastructure projects.

Minsheng Investment reveals ambitious path towards 1tr yuan valuation within three years

CMIG’s rapid expansion has inspired various privately-owned companies to form regional-level investment groups that have attracted powerful corporate giants in their own areas, such as Chint Group, a Zhejiang-based industrial electrical equipment maker and Country Garden, a Guangzhou-based property developer.

Last year, Zhejiang United Investment Group, for instance, was established with a registered capital of 30 billion yuan.

Wealthy individuals in Guangdong and Jiangsu too have launched similar multi-billion-yuan investment conglomerates this year, and Li said CMIG is happy to partner with any local investment groups to jointly explore business opportunities, without elaborating.