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China on Tuesday established its first state-level yuan-based fund of funds (FOF) with its total value to reach 60 billion yuan (about $9 billion).
The yuan FOF was jointly initiated and established by the Suzhou Ventures Group (SVC) and China Development Bank Capital Co., Ltd., a wholly-owned subsidiary of the China Development Bank (CDB).
FOFs invest in funds such as venture capital or private equity funds and have become a main pillar of the finance industry, along with banking and insurance.
The fund would be worth 15 billion yuan during its first phase of operation, with 10 billion yuan to be used as Private Equity (PE) FOF and managed by the CDB Capital Co., Ltd, and the remaining 5 billion yuan to be used as Venture Capital (VC) FOF and managed by the SVC, a statement on the CDB's website Tuesday said.
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Registered in Suzhou Industrial Park in Jiangsu Province, the FOF was jointly initiated by CDB Capital, a wholly-owned subsidiary of China Development Bank (CDB), and Suzhou Ventures Group (SVG). It has completed the first round of fund raising and got 15 billion yuan for Private Equity (PE) FOF and Venture Capital (VC) FOF. According to the official statement, ten billion yuan PE FOF managed by CDB Capital will be invested mainly in industrial M&A projects, while the remaining five billion yuan VC FOF managed by the SVG will be invested in start-up and growing venture capital funds. The FOF executives also decided to recruit Siguler Guff & Company, a well-established independent PE investment firm with rich experience in fund and FOF management, as a partner to co-manage the project with global vision.
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