First RMB loans fund to be set up for Belt and Road
A Hong Kong fund-management firm is to launch one of the first private funds linked to the nation-led Belt and Road Initiative (B&R), as well as the world’s first B&R fund to use renminbi for loans and deal settlements.
Golden Grain Capital Management Ltd (GGC), which began operation in mid-2014, said on Saturday its China Ocean Strategic Industry Investment Fund (COSIIF) will be used for investing in infrastructure projects and marine-related businesses in the B&R economies.
Initially, it will inject 30 billion yuan ($4.44 billion) into the fund and step up investment in the following years. The fund will help cater to the huge capital demand for B&R projects as Asia will need up to $800 billion annually for infrastructure construction by 2020, according to the Asian Infrastructure Investment Bank (AIIB). The two official financing institutions — the AIIB and the Silk Road Fund — now boast a capital pool of $100 billion and $40 billion, respectively.
The COSIIF will operate in both Hong Kong and Dubai, where it will cooperate with Dubai-based Elyseum Capital Partners. The Dubai company’s expertise in investment services and Islamic finance will offer great help in forays into the B&R markets.
With the renminbi having joined the International Monetary Fund’s elite Special Drawing Rights basket earlier this month, the new fund aims to launch its offshore renminbi investment fund in mid-2017, according to COSIIF Chairman Jin Kun.
The fund will also provide consulting services to Chinese mainland enterprises in going overseas, focusing on pricing and financing strategies.
Jin hoped that investors will seize the vast business opportunities arising from the B&R strategy, which aims to build a trade and infrastructure network linking Asia with Europe and Africa along the ancient Silk Road routes.
According to official statistics, total outbound Chinese investments by Stateowned enterprises and private companies last year had reached $157 billion and $51 billion, respectively.
Daniel Lui Chi-keung, GGC’s chief executive officer, said Hong Kong has abundant professional talents, a worldrenowned legal system and a reputed status as an international financial center, which will be of great benefit to the newly established fund.
He aims to lure investors not only from Hong Kong and the Chinese mainland, but also various countries and regions to join the B&R development and share its benefits.
Dubai’s Elyseum was the first to join the drive.
Elyseum Chairman Richard Pudner said he saw huge opportunities under the B&R project that involves more than 60 countries and regions, mostly developing countries, with a total population of 4.4 billion people, or 63 percent of the world’s population, and 30 percent of the global GDP.
There will also be big opportunities in Islamic financing, he said, as Muslims make up 23 percent of the world’s population. As Islamic financing has yet to blossom, it can be translated into great potential, especially with the implementation of the B&R Initiative.
Hong Kong has abundant professional talents, a world-renowned legal system and a reputed status as an international financial center.” Daniel Lui Chi-keung, chief executive officer of Golden Grain Capital Management Ltd