SHANGHAI (Reuters) – CITIC Securities (600030.SS), China’s biggest listed brokerage, will close its first private equity fund next week after raising about 9 billion yuan ($1.3 billion), and is considering raising funds overseas, a senior executive said on Wednesday.
The local-currency fund, to be managed by CITIC Private Equity Funds Management Co, will target investments in the finance, consumer, raw materials and machinery manufacturing sectors, said Liu Lefei, chairman of the CITIC Securities unit.
At least 15 Chinese brokerages, including CITIC Securities, Guoyuan Securities 000728.SZ and Changjiang Securities Co (000783.SZ), have obtained regulatory approval to start private equity investments, seeking to expand revenue as competition intensifies in the brokerage and investment banking businesses.
“China’s financial reform has just started, so there are many investment opportunities in this sector,” Liu, former chief investment officer at China Life Insurance (2628.HK) (601628.SS), told a conference in Shanghai.
“There are also huge opportunities in machinery manufacturing, as China is and will continue to be the workshop of the world,” Liu said, adding that rapid economic growth and urbanisation would boost the consumer sector.
Liu said he was considering launching U.S. dollar-denominated funds to raise money overseas, seeking to lure foreign investors who are typically more sophisticated than local investors.
“Most cash-rich Chinese entrepreneurs are not willing to have their money managed by others, and often believe they can manage their money better,” Liu said. “Overseas money is more stable, and longer-term in nature.”
He added that it was also difficult to raise money from government bodies or state-owned companies in China due to regulatory hurdles.
Fortune Capital, another Chinese investment management firm, also said on Wednesday that it planned to raise up to $100 million in its first dollar fund to meet rising demand from overseas investors seeking higher returns in China.
The Chinese government has been encouraging the development of the private equity sector, aiming to channel more money into the private sector to help sustain the economic recovery, which has relied heavily on state-backed stimulus. ($1=6.83 Yuan) (Reporting by Samuel Shen and Edmund Klamann)