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China to expand PE business of securities companies

By Li Xiang (chinadaily.com.cn)
Updated: 2011-06-18 20:47
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BEIJING -The China Securities Regulatory Commission (CSRC) is considering expanding the business of private equity (PE) investment by domestic securities companies, an official said on Saturday.

"We are considering turning the pilot program of PE investment by securities companies into one of their regular businesses," Huang Wenyuan, director of the department of institutional investors at CSRC, said while attending a PE investment meeting in Beijing.

Securities companies speculated that regulators may soon allow more securities brokers to establish PE funds. At present, most securities companies can only use their own capital to do PE investments and they are not allowed to raise funds from investors in the market.

China launched the pilot program of PE investment by securities companies in 2007. So far, there are 34 securities companies that have gained the license for PE investment. The total investment value has reached 10.2 billion yuan, according to the Securities Association of China (SAC).

The China International Capital Corp (CICC) was recently approved by regulators to set up a PE fund of 5 billion yuan. It is the first PE fund in China to be managed by a securities broker.

"We expect the revenue from our PE investments to account for 20 to 30 percent of CICC's total revenue in the next three to five years," said Liu Zhao, executive director of CICC's Jiacheng Private Equity Investment Fund.