IN an effort to meet China's increasing demand for foreign capital, one of the mainland's largest non-banking financial institutions has teamed up with American and Hong Kong investment groups to establish a Hong Kong-based investment bank. The China Trust and Investment Corporation for Foreign Economic Relations and Trade (FOTIC Beijing) holds a 40 per cent stake in the venture, which has been called FOTIC Capital. FOTIC Beijing is a government-owned company with assets of more than US$10 billion that reports directly to the Ministry of Foreign Trade and Economic Co-operation. The remaining interest is split equally between US-based AIA Capital and Hong Kong financial services group Goodwill International (Holdings). Mr Lee Ching Yan, managing director of FOTIC Capital, said yesterday that the new joint venture would help Chinese companies attain listings on overseas stock exchanges and assist them in finding foreign investors to inject capital into emerging Chinese enterprises. ''We believe China is undergoing a transition period. It's opening up fast, and a lot of enterprises need capital, especially after the credit crunch last year,'' he said. Madame Miu Puikun, FOTIC Beijing's president, is chairman of the new venture which will be able to rely on the foreign trade ministry's far-reaching influence to help it carve out a niche in the competitive world of merchant banking, Mr Lee said. FOTIC Beijing's only major holding in Hong Kong to date is a 33.75 per cent stake in First Pacific Bank, which it jointly purchased for $362.1 million with another branch of the ministry, the China National Metals and Minerals Import and Export Corp. The joint venture will sponsor initial public offerings and provide advice and underwriting on all forms of raising capital, including rights shares, share placements, warrant issues and convertible bonds. FOTIC Capital was to have underwritten the H-share issue for Shanghai Haixing Shipping, but the listing has been postponed. Mr Lee said his company also hoped to raise capital in the form of loans, bonds and equity for Liantong Communications, one of China's two telecommunication networks. Mr Lee said he viewed FOTIC Capital as a facilitator for Chinese businesses, rather than as a purely profit-making venture. ''We're not concerned about making money. We see ourselves as a bridge between East and West. If we do things right, the money will come too.''