Private, State fund planned for SOEs

The plan is the companys newest initiative to support Chinas 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 companys 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 Chinas 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 Chinas SOEs along the countrys transformation from a planned to a market-oriented economy. The company has evolved from a loss-making SOE that managed the countrys production assets and logistics in the 1990s into the countrys 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.