China will officially launch its long anticipated China Investment Corp fund tomorrow, according to an editorial in Chinese newspaper Securities Journal. The fund will invest $200 billion (€140 billion) of the government’s $1.3 trillion in foreign currency reserves, which until now China has mainly put into US bonds.
The fund will be modeled after Singapore’s government-owned Temasek Holdings, the Securities Journal said. Temasek invests in banking telecommunications, among other sectors, in East Asia and India.
The Chinese government has shown an appetite for private equity lately. The China Investment Corp made its first investment in May when it bought a $3 billion, 10 percent stake in The Blackstone Group ahead of the US firm’s listing on the New York Stock Exchange. European buyout firm Apax Partners has also been in talks with the Chinese government this week in an attempt to secure investment from the government’s sovereign wealth fund.
The Chinese State Council has also recently approved four new domestic private equity funds targeting a total of Rmb46 million ($6 million, €4.3 million) to support businesses in the energy, innovative manufacturing and high technology sectors. The funds will be modeled after China’s first wholly domestic private equity fund, the Bohai Industrial Investment Fund, which was established in December with Rmb20 billion to provide funding for companies struggling to access bank loans in Tianjin’s Binhai New Area.