Direct investment consent for brokerages
By Chen Li |
June 21, 2011, Tuesday
|
Print Edition
Print Edition
CHINESE brokerages are expected to get the green light for direct investments this year, a move that will broaden their revenue streams and help the government's economic restructuring plans.
Trial operations have been ongoing for the past four years and authorities said they found no serious violations, Securities Daily cited an unnamed official with the China Securities Association as saying yesterday.
A total of 34 Chinese brokerages have won approval to take part in the trial operation since 2007. So far the brokerages have set up 28 direct investment firms and 16 of those have already made profits, the newspaper said.
These investment firms have so far invested a combined 10.2 billion yuan (US$1.58 billion) in 229 projects, with 29 of those having already gone public, it added.
However, some questioned whether brokerages could be trusted when they are hired as underwriters to help the companies they invest in go public.
China currently only allows securities firms to use up to 15 percent of their overall capital for direct investments. They are not allowed to raise money from other parties for investment.
But as a trial run, China International Capital Corporation Ltd got the nod in April to become the first domestic securities firm to run a private equity fund.
The CICC Jiatai Industry Fund by the nation's leading investment bank has already raised 1.5 billion yuan.
The yuan-denominated fund, which will mainly target opportunities in high growth firms, aims to raise 5 billion yuan within a year.
The money is expected to be raised from domestic insurers, banks, enterprises and private firms with a threshold investment of 50 million yuan, Securities Daily said.
Trial operations have been ongoing for the past four years and authorities said they found no serious violations, Securities Daily cited an unnamed official with the China Securities Association as saying yesterday.
A total of 34 Chinese brokerages have won approval to take part in the trial operation since 2007. So far the brokerages have set up 28 direct investment firms and 16 of those have already made profits, the newspaper said.
These investment firms have so far invested a combined 10.2 billion yuan (US$1.58 billion) in 229 projects, with 29 of those having already gone public, it added.
However, some questioned whether brokerages could be trusted when they are hired as underwriters to help the companies they invest in go public.
China currently only allows securities firms to use up to 15 percent of their overall capital for direct investments. They are not allowed to raise money from other parties for investment.
But as a trial run, China International Capital Corporation Ltd got the nod in April to become the first domestic securities firm to run a private equity fund.
The CICC Jiatai Industry Fund by the nation's leading investment bank has already raised 1.5 billion yuan.
The yuan-denominated fund, which will mainly target opportunities in high growth firms, aims to raise 5 billion yuan within a year.
The money is expected to be raised from domestic insurers, banks, enterprises and private firms with a threshold investment of 50 million yuan, Securities Daily said.
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