Citic Capital to form buyout and venture capital funds with partners

Citic Capital Holdings, an investment arm of the nation's biggest financial conglomerate, is planning to set up a buyout fund and a venture capital fund with two of the country's strongest financial institutions.

Citic Capital chief executive Zhang Yichen disclosed the plan yesterday on the sidelines of the annual meeting of the Chinese People's Political Consultative Conference. However, he refused to divulge the share structure or overall size of either joint venture.

A Reuters report said Citic Capital - which manages US$1.6 billion in several funds - and the National Social Security Fund would invest 10 billion yuan (HK$11.34 billion) each in the planned buyout fund.

The report also said Citic Capital would launch the venture capital fund with China Development Bank.

These new private equity endeavours apparently are in line with Beijing's latest strategy to channel more funds into the embattled real economy. Corporate China, especially the private sector, has been struggling to win confidence from increasingly risk-averse domestic lenders ever since the global financial crisis hit late last year.

The team-up with the social security agency would be the second buyout fund under the Citic Capital umbrella. In 2007, Citic Capital raised US$425 million in a China-focused US dollar-denominated private equity endeavour.