Hony Capital, the private-equity firm backed by Legend, is likely to deploy more capital in state-owned manufacturing and healthcare sectors as Beijing seeks to further restructure its government-owned companies. "This is a fabulous opportunity," said John Zhao, Hony's founder and chief executive. "We've accumulated a lot of strengths, experience and scars." Hony, one of China's biggest private-equity firms, has taken stakes in 31 state-owned firms, investing 14 billion yuan (HK$17.6 billion) over the past decade. The total value of those companies has more than doubled on average. The Beijing-based investor has led restructuring of China Yaohua Glass, one of China's biggest sheet glass manufacturers, construction equipment giant Zoomlion Heavy Industry Science & Technology and Lianyungang Zhongfu Lianzhong Composites, a manufacturer of heavy-duty pipe, rotor blades for wind turbines, and industrial tanks. Market-driven is much better than state control for competitive industries JOHN ZHAO, HONY CAPITAL In January, securities regulators approved Hony's bid to take a 10 per cent stake in Shanghai Chengtou, a city-backed real-estate and waste-management company, for 1.8 billion yuan. China has promised sweeping changes to its state industry. Last month, the National People's Congress said it would "encourage non-public business" to invest in state businesses. That is creating new openings for private-equity funds, both foreign and domestic. "We will see good firms separated from bad firms," Zhao said. Sinopec, Asia's biggest oil refiner, said in February it was selling up to 30 per cent of its marketing arm, in a multibillion-dollar deal involving more than 30,000 petrol stations that is expected to close later this year. "There's a consensus [among state company managers, government regulators and investors] that market-driven is much better than state control for competitive industries," Zhao said. Hony raised its first US$38 million fund from state-sponsored investment holding company Legend in 2003 and today has about US$7 billion under management. It has invested in industries ranging from heavy equipment to renewable energy, and lately has started to enter the film and entertainment sector.