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Christine Chan

AVIATION Industries of China (AVIC) and China North Industries Group (Norinco) aim to raise US$100 million and $500 million respectively by setting up funds for joint-venture investment.

  Organised by Hongkong-based Tien Lee (International) Investment Co, China Aeronautical Technology Fund and Norinco Fund will have Swiss Bank Corp as financial adviser.

  Manager of the China Aeronautical Fund will be Tien Lee Aero-Fund Investment Management, while that for Norinco will be a management committee with members comprising directors from Tien Lee and Norinco.

  AVIC and Norinco will have a nine per cent stake in their respective funds, which targets international investors.

  Officials of AVIC and Norinco said the establishment of the fund was part of the conversion programme of China's military industries to civilian use.

  The two funds will mainly invest in unlisted mainland aviation enterprises, with the aim of ''converting military technology for civilian use''.

  Officiating at the agreement signing ceremony were key persons from the country's aviation industry and national defence, such as Mr Huai Guomo, vice-minister of the Commission of Science, Technology and Industry for National Defence (COSTIND) and Madam Nie Li, vice-minister of COSTIND.

  Initially, the China Aeronautical Technology Fund will invest not less than 25 per cent of equity in a total of 19 aviation-related state-owned and joint ventures.

  AVIC vice-president Zhang Hongbiao said yesterday it was their intention to seek a listing on the Irish stock exchange for the fund, incorporated in the Cook Islands.

  Presently, more than 200 trading companies and manufacturing enterprises are under AVIC's supervision.

  Last year, the group's turnover in imports and exports was more than US$1 billion and it had trading partners in more than sixty regions.

  It now produces civilian goods such as civil aircraft, engines, motor vehicles, machinery, and electronics with over 5,000 production lines.

  Sale of civilian products accounted for 70 per cent of the group's turnover last year, compared with only 10 per cent in 1979.

  As for the Norinco Fund, the initial phase will raise $200 million while the second phase $300 million, Norinco vice-president Tian Ruizhang said.

  First phase of the fund will invest in enterprises engaged in the manufacture of cars, luxury tourist coaches and hydraulic products and computer embroidery machines.

   Norinco signed letters of intent earlier this week with Pacific Group of Hongkong to turn eight of its car-parts factories into joint ventures for eventual listing.

 Norinco, directly under the State Council, comprises 157 state-owned industrial enterprises with fixed assets of 60 billion yuan (HK$81.4 billion at official rates).

  It hopes that with the launch of the Norinco Fund, more funds could be generated to finance its growth.

  Tien Lee (International) Investment director Bernard M.S. Ho said the two funds would give a yield of at least eight per cent to investors.

  Tien Lee managing director Stephen S.K. Wong said preliminary response from international investors to the funds was encouraging.

    ''The funds' image is very good, and they will probably attract longer-term investors,'' he said.



Tien Lee gets behind AVIC, Norinco funds