Private, State fund planned for SOEs

China Chengtong Holdings Group, a State-owned investment and asset-operating company, said it will launch a large-scale fund to pool State and private capital to finance the mixed-ownership reform of the country's State-owned enterprises.

The plan is the company's newest initiative to support China's SOE reform, after it started the 350 billion yuan ($53.7 billion) national structural reform fund last September in collaboration with several big state firms to provide capital for SOEs' mergers and acquisitions, asset restructuring and industrial upgrades.

The new fund will target projects related with SOEs' ownership reforms, with private capital expected to make up a big portion of the fund, according to the company's chairman, Ma Zhengwu.

"We will establish a major investment platform to allow more private capital and smaller funds to participate in the SOE ownership reforms," Ma said without disclosing the scale of the new fund.

The move by China Chengtong reflects the acceleration of China's SOE reforms through capital-market practices to help major state companies to divest nonperforming assets, reduce debt burdens and raise operational efficiency.

Ma said the company is also preparing to set up a fund to support the overseas operations of Chinese SOEs under the Belt and Road Initiative and to help them explore and invest in overseas projects.

China Chengtong itself is an example of the evolution of China's SOEs along the country's transformation from a planned to a market-oriented economy. The company has evolved from a loss-making SOE that managed the country's production assets and logistics in the 1990s into the country's leading equity investment firm responsible for operating and restructuring state assets.

The company has handled and helped dispose of state assets and debts worth about 74.9 billion yuan over the past 10 years, involving 664 central and local SOEs and nearly 90,000 displaced employees.

The latest high-profile deals initiated by China Chengtong include the 800 million yuan capital injection in the mixed-ownership restructuring of COFCO Capital Investment and the 13 billion yuan investment in the share offering of mobile carrier China Unicom through the structural reform fund.

China Chengtong has also been actively participating in the debt-for-equity programs of some debt-laden SOEs and has been investing in SOEs' initial public offerings as a strategic cornerstone investor.