CHINA Everbright Holdings is an investment bank with a difference. Now run by seasoned, former officials of the People's Bank of China, Everbright's modus operandi is balancing profits with the need to raise funds for mainland industrial enterprises operating overseas. Established in 1983, the group has the distinction of being the first mainland firm in Hong Kong to be set up by China's State Council. It was founded by Wang Guangying, nicknamed the 'red capitalist' for his keen - or, depending on your point of view, too keen - interest in market economics. Mr Wang's brother-in-law was the late Chinese President Liu Shaoqi, but that did not stop him being replaced in 1990 after the bank made huge losses in the preceding decade. Caught up in the free-wheeling spirit of the mid-1980s, the firm suffered equity and trading losses when Hong Kong was suddenly thrust into the political limelight during the Sino-British talks. However, under Mr Wang's successor, Qiu Qing, the former vice-governor of the People's Bank of China, the bank late last year recorded its first period of real expansion in at least four years. Her success follows a period of soul-searching by the bank. Since 1990, it has kept an extremely low profile, only emerging in May last year to buy its first locally listed company, Newfoundland International. The branch was renamed China Everbright International and is geared towards investment banking and industrial projects. The shroud of mystery still surrounding the new China Everbright may be due to Ms Qiu's lofty position in mainland politics. Wang Yake, a director of China Everbright Holdings and managing director of China Everbright International, said: 'Madame Qiu is a Standing Committee member of the National People's Congress. This position of power and authority means that she is not as accessible to outsiders as, say, I am.' Ms Qiu spent most of her first year at China Everbright clearing up after Wang Guangying. But after acquiring Newfoundland, she embarked on a period of expansion. First on the list was a 45 per cent stake in Hanwah Holdings. The new company, engaged in manufacturing electronics, was renamed China Everbright Technology. The group also acquired a 59.7 per cent share in IHD Holdings, which then became China Everbright-IHD Pacific. The new arm is responsible for the group's property and retail interests. China Everbright has also taken equity interests in banking and insurance companies, including a 20 per cent share in International Bank of Asia and, recently, a five per cent stake in National Mutual Asia. Mr Wang, a former employee of the People's Bank of China, justified Everbright's expansion plans, saying that acquiring listed companies improved asset quality. In addition, he said: 'We aim to play the role of investment bank to help Chinese enterprises seek proper funds.' The firm has bought investment interests in several mainland enterprises, including China Yuchai International, which will list on the New York Exchange soon, and a 49 per cent interest in Chengdu Seamless Steel Tube (CSST). About 19.6 per cent of this will be injected into Everbright's Singapore-listed Company HTP Holdings, and the remaining 29.4 per cent will be sold to China Everbright International. China Everbright International is also planning to increase its stake in 999 Pharmaceutical from the existing 11 per cent to 20 per cent. Mr Wang said although the group had been expanding rapidly during the past 12 months, China Everbright International, IHD and its Singapore subsidiary HTP Holdings were not short of funds. Only Hanwah was undergoing debt restructuring, he said, adding that he expected the process to be completed this month. However, not everyone is as confident about some of China Everbright's recent acquisitions as Mr Wang. Analysts have questioned the company's investment judgment in buying Hanwah and IHD. They said Hanwah was a loss-making television-and-audio equipment manufacturer, while IHD had as its one-time chairman and major shareholder, Ch'ng Poh. Ch'ng was jailed for five years recently for defrauding his company of more than $127 million in the mid-1980s. However, Mr Wang said Everbright was a newcomer to the Hong Kong financial market and was entitled to a few mistakes. 'It was possible to make mistakes when we were not familiar with the market, but [it is] more important we learn from [those] mistakes and improve the company's quality.' Everbright also has the disadvantage of often being compared to its illustrious cousin, the China International Trust and Investment Corporation (CITIC), which began in Hong Kong at about the same time. Today, CITIC has an enviable portfolio of local assets and its listed vehicle CITIC Pacific is a Hang Seng Index stock. Mr Wang explained the difference in the two companies' fortunes by claiming that, unlike CITIC, China Everbright had no industrial backup and relied purely on management expertise. Asked if Everbright was looking to become a Hang Seng Index stock, he replied: 'It would be a dream come true for an investment bank like us to become a blue chip, not because we don't have enough quality but because there are so many other criteria governing something like this.'
