China Private Equity Investment
China Private Equity Investment
China’s State Pension Fund to Invest in Private Equity
Some exciting news from China: the country’s pension fund, the National Social Security Fund, has announced that it is interested in investing with 3-5 private equity funds this year. The state pension fund is enlisting the private equity funds help manage some of its US$82 billion portfolio.
Chairman Dai Xianglong said at the Boao Forum for Asia, “We will pick at least 3-5 private equity firms this year, focusing on investing in small and medium businesses and the service industry.” By purchasing equity stakes in state firms, the pension fund hopes to limit its bond exposure and increase its holdings to at least $1 trillion yuan. Dai did not say if the fund would invest in domestic or foreign markets.
Although the pension fund is allowed to invest up to 20% of its assets abroad, it only invested $1.66 billion outside China by the end of 2007. In addition to investing with private equity funds, the NSSF’s chairman expressed hopes of using the Chinese yuan currency to invest directly overseas. While the yuan is not entirely convertible, financial regulators have called for a greater use of the currency with the Chinese central bank governor even calling for the yuan replacing the U.S. dollar as the world’s primary reserve currency.
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