CITIC Securities launches China's first buyout fund - paper

By Staff Reporter

Jun 20, 2012 01:31 PM EDT

China's CITIC Securities has received regulatory approval to launch the country's first domestic buyout fund, the official Shanghai Securities News reported, as Beijing moves to support its struggling mutual fund industry.

In addition to providing an alternative

to bank lending, buyout funds can serve as exits for private equity (PE) firms and can help buy out listed companies that want to go private, an industry source was quoted in the report as saying.

The China Securities Regulatory Commission (CSRC) has been working to improve mechanisms for companies to delist from domestic exchanges.

The fund, to be managed by a subsidiary called Goldstone Investment, will start with an initial investment of more than 5 billion yuan ($786.84 million), but plans to expand up to 20 or 30 billion yuan, the report quoted Goldstone CEO Qi Shuguang saying.

Goldstone will primarily raise funds from institutional investors, the report said.

While CITIC said the fund will be the country's first "buyout" fund, a similar "PE fund" application by China International Capital Corporation was approved in May 2011.

Many more fund management companies have applications to launch such funds awaiting approval from the CSRC, including Guotai Securities, Galaxy Securities and Haitong Securities. ($1 = 6.3545 Chinese yuan)

This article is copyrighted by Reuters

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