CMIC en­ters mar­ket with $8b in as­sets

China Daily (Canada) - - BUSINESS - By WEI TIAN in Shang­hai weitian@chi­nadaily.com.cn

A 50 bil­lion yuan ($8.14 bil­lion) pri­vate con­glom­er­ate — China Min­sheng In­vest­ment Corp Ltd — was un­veiled in Shang­hai on Thurs­day with the goal of pro­mot­ing China’s bur­geon­ing pri­vate in­vest­ment in do­mes­tic and over­seas mar­kets.

The com­pany was launched by the All-China Fed­er­a­tion of In­dus­try and Com­merce, a cham­ber of com­merce co-founded by 59 pri­vate com­pa­nies in such di­verse fields as ma­chin­ery, in­for­ma­tion tech­nol­ogy, fi­nance, new en­ergy and e-com­merce. CMIC’s share­hold­ers have com­bined as­sets of about 1 tril­lion yuan.

The 50 bil­lion yuan in reg­is­tered cap­i­tal, which will be in place over thenext three years, ac­counts for a stake by each share­holder of no more than 2 per­cent, or 1 bil­lion yuan, and no less than 0.6 per­cent, or 300mil­lion yuan, ac­cord­ing to in­for­ma­tion pro­vided at the open­ing cer­e­mony.

On the founders’ list are some of China’s most renowned pri­vate com­pa­nies, such as Sun­ing Com­merce Group Co Ltd and Ocean­wide Hold­ings Co Ltd. Most, how­ever, are lesser known in­vest­ment com­pa­nies with reg­is­tered cap­i­tal of un­der 2 bil­lion yuan.

“China Min­sheng In­vest­ment will be an ex­per­i­ment not only for China’s pri­vate sec­tor but the en­tire econ­omy as well,” said Dong Wen­biao, CMIC’s chair­man. The 57-year-old took the post af­ter re­sign­ing as chair­man of China Min­sheng Bank­ing Corp, China’s first na­tional bank to be founded by pri­vate cap­i­tal.

Li Huaizhen, pres­i­dent of CMIC, who is also a for­mer se­nior ex­ec­u­tive at CMB, said: “The di­ver­si­fied own­er­ship struc­ture ... will op­ti­mize re­source al­lo­ca­tion.”

The idea of CMIC was floated by Dong in May 2013 and was ap­proved by the cen­tral gov­ern­ment in April. It is ex­pected to be a pri­vate ver­sion of China In­vest­ment Corp, the coun­try’s $200 bil­lion sov­er­eign wealth fund.

Though it has less cap­i­tal strength, CMIC has set am­bi­tious goals in nine in­dus­tries: re­new­able en­ergy, iron and growth rate of pri­vate in­vest­ment in first seven months steel, min­ing lo­gis­tics, real es­tate, prop­erty man­age­ment, cor­po­rate air­craft, in­vest­ment bank­ing, strate­gic eq­uity in­vest­ment and over­seas in­vest­ment.

Some of its plans in­clude fos­ter­ing the world’s sec­ond­largest air­craft com­pany, with a fleet of 500 planes, within five years, and in­vest­ing $1.5 bil­lion in a Euro­pean head­quar­ters in Lon­don, which will bring more Chi­nese pri­vate cap­i­tal to Europe.

“The es­tab­lish­ment of China Min­sheng In­vest­ment marks an im­por­tant step in the re­form of China’s in­vest­ment sys­tem. It also can help stim­u­late the vi­tal­ity of so­cial cap­i­tal in the face of over­all down­ward pres­sure on the econ­omy,” said Wang Jun, an econ­o­mist at the China Cen­ter for In­ter­na­tional Economic Ex­changes, a top think tank.

Of­fi­cial data showed that in the first seven months of this year, China’s pri­vate in­vest­ment grew by 19.6 per­cent, which was 3.5 per­cent­age points slower than a year ago.

Ex­perts have urged the gov­ern­ment to open more mo­nop­o­lized sec­tors for pri­vate cap­i­tal, but pri­vate in­vestors proved to be no match for the State-owned en­ter­prises.

“The mo­nop­o­lized in­dus­try does not au­to­mat­i­cally open its door for you,” said Li, CMIC’s pres­i­dent. “SOEs are will­ing to co­op­er­ate only when they rec­og­nize your ad­van­tages. Our ad­van­tage is our cap­i­tal, plat­form, tal­ent and flex­i­ble mech­a­nisms. With the re­sources and mar­kets of the SOEs, we can do many things.”

Zhu Zhenxin, a macroe­co­nomic an­a­lyst with­Min­sheng Se­cu­ri­ties Co Ltd, said one thing to watch is whether the found­ing of CMIC will ben­e­fit small pri­vate com­pa­nies.

“With its mas­sive scale, CMIC will be in­ter­ested in small pro­jects. But through the in­te­gra­tion of the in­dus­trial chain, the­com­pany will also be able to bring­more­op­por­tu­ni­ties to down­stream in­dus­tries and smaller pri­vate en­ter­prises,” Zhu said.

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