Citic seeks ¥10b for aggressive takeover fund

Mainland brokerages are expected to inject new life into the country's sluggish private-equity sector after the regulator waived rules to help them diversify their revenue sources.

Citic Securities, the mainland's largest brokerage, said it would raise up to 10 billion yuan (HK$12.3 billion)for a buyout fund to be operational in mid-November, according to a report by Bloomberg that cited its general manager Cheng Boming.

The first buyout fund run by a mainland brokerage plans to spend 80 per cent of the proceeds on targeted investments soon after the launch, Cheng said in New York.

The creation of the fund and its planned aggressive investments follows a liberalisation by the China Securities Regulatory Commission (CSRC) in the first half of this year as the regulator tries to bolster domestic brokerages amid a weak stock market.

Previously, Beijing barred brokerages from setting up buyout funds that seek to obtain majority control of an investment target.

Citic was the first brokerage to receive the green light to launch a buyout fund after a clutch of brokerages lobbied the CSRC in February to scrap rules that prevented them from acquiring control of other companies.