China Merchants Sets Up Private Equity Unit

SHANGHAI (Reuters) – China Merchants Securities has set up a unit to invest in pre-IPO companies, bringing to 15 the number of Chinese brokerages with a private equity licence, Securities Times reported on Monday.

China Merchants’s private equity unit, with 100 million yuan ($14.64 million) in registered capital, will invest in industries including manufacturing, new energy, media, modern agriculture and healthcare, said the newspaper, which is affiliated to the Shenzhen Stock Exchange.

So far, 15 Chinese brokerages, including China Citic Securities (600030.SS), Guoyuan Securities (000728.SZ) and Changjiang Securities Co 000783.SZ have been allowed by regulators to start private equity investment, with more than 10 billion yuan raised so far for the business, the newspaper said.

China is encouraging private equity investment as it seeks to channel more money into the private sector to help sustain an economic recovery supported by state-backed stimulus measures.

The rush for private business by brokerages comes ahead of the planned launch of a Nadaq-style second board in Shenzhen. (US$1=6.832 Yuan)