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.

The targeted size of 10 billion yuan by the Citic buyout fund itself is nearly 60 per cent of the total private-equity funds raised for mainland investment in the third quarter of this year.

According to fund consultancy Zero2IPO, 45 new mainland-focused funds raised a combined US$2.67 billion in the three months to September 30, 47.1 per cent higher than a year earlier.

Mainland brokerages have been reeling from a market downturn since 2010 as income from stock-trading has taken a beating.

CSRC chairman Guo Shuqing has pledged to drastically reform the securities sector since taking office late last year.

According to a document by the CSRC, brokerages were confident of making huge profits from buyout deals and strongly urged the regulator to waive the rules.

Analysts said more brokerages would soon follow Citic Securities in launching their own buyout funds.

Beijing allowed brokerages to set up private-equity subsidiaries in 2007 but barred them from taking control of other firms.