CHINA'S Ministry of Finance is to partner a World Bank-backed venture capital fund to establish what will become a high-powered company investing in the country's hi-tech sector. Agreements have been reached among shareholders of the investment company, which does not have an official English name but can be transliterated to 'Xinghua', and which counts among its shareholders China Walden Investments, Xian-based Caihong Electronics Group and two Ministry of Finance offshoots. China Walden Investments is an offshore venture capital fund, backed by World Bank offshoot International Finance Corp (IFC), and managed by the Walden Group, an American venture capital company with strong Asian links. It also has as shareholders American brokerage J P Morgan, Singaporean bank Tatlee Bank, mainland brokerage Shanghai Shenyin Securities and other foreign heavyweights. The fund is worth at least US$25 million, but has a target size of $50 million. China-registered Xinghua will have an initial share capital of at least $10 million and will be launched early next year, according to manager Shanghai Shenyin Securities. The brokerage added the fund still had to go before the relevant authorities, including the State Economic and Trade Commission. Xinghua is still being established, and details of the firm's shareholding breakdown and exact share capital have yet to be finalised. Also, the names of the two subsidiaries under the Ministry of Finance have not been revealed, although it is understood that the offshoots will account for less than 50 per cent of Xinghua. The aim of the investment company is to ensure capital appreciation by investing in strategic stakes in unlisted enterprises in China, especially in the hi-tech industry. Shanghai Shenyin said the enterprises would be restructured through corporate overhaul and eventually listed on stock exchanges, but that there were no plans to list Xinghua. Shenyin said the participation of the offshore venture capital fund in the investment company was to help lure foreign capital to China's hi-tech industry. The brokerage said the influence and financial backing of the ministry could help to win Beijing's support in approving the establishment. Caihong Electronics Group - the only large-scale enterprise under the Ministry of Electronics - has been included to make use of the television tube maker's expertise in the hi-tech sector. Shanghai Shenyin is to play a significant managing role in Xinghua, which has already invested in two enterprises, including Guangdong's Rongsheng Refrigerator. The brokerage dismisses complaints that there are not enough China enterprises for China funds to choose from. A company official said: 'It's not a matter of whether there are enough enterprises to invest . . . it's a matter of how you can restructure the enterprise through a proper rights transfer. 'We have the expertise to help enterprises reorganise their corporate structure.' One of Shanghai's biggest brokerages, Shanghai Shenyin has 16 departments with 1,200 staff in its China and Hong Kong offices.