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China lures domestic insurers to $6bn infra fund

Nearly 50 investors have backed the vehicle, whose first asset will be Russia’s $27bn Yamal LNG project.

The Chinese government intends to launch a CNY40 billion (€5.63 billion; $6.07 billion) fund to finance energy and infrastructure projects overseas, according to an announcement on the country’s Insurance Regulatory Commission’s website.

The vehicle will be managed by China Insurance Investment (CII), a newly formed entity with CNY1.2 billion in registered capital. Headquartered in the Shanghai free trade zone, the company will count 46 shareholders, including 27 insurance companies and 15 asset managers. Each will hold a maximum stake of four percent.

The fund will make its maiden investment in Russia’s $27 billion Yamal liquefied natural gas (LNG) project, according to the statement, which added that the move was intended to help China boost energy security.

Yamal LNG has already received support from China’s Silk Road Fund, which last month acquired a 9.9 percent equity stake in the project and lent it €730 million.

The fund will also help finance China Merchants Steam Navigation Company’s port projects in Sri Lanka, Turkey and Djibouti, echoing the country’s One Belt One Road initiative, the statement said.

CII has already signed investment agreements worth more than CNY100 billion, CNY60 billion of which are earmarked for urban regeneration and infrastructure deals. It is also interested in backing companies operating in emerging industries like big data and cloud computing as well as clean energy projects.

Chinese insurers managed CNY11.43 trillion of assets as of 30 June 2015, according to the country’s official news agency. The industry’s regulator said CII was launched to help them expand and diversify their investments.