APAC: Private Chinese investors launch USD 1.5bn Belt and Road fund 

20 September 2018 - 12:00 am UTC

A group of private sector Chinese investors have launched a Belt and Road (BnR) Industrial Cooperation Investment Fund focusing on infrastructure and energy projects overseas.

China Guangcai International Investment, a conglomerate, formed the fund along with B&R Taiwan Economic Association, as well as a Shanghai-based unit of Central Newsreels and Documentary Film Studio.

TBR Private Fund, a private equity firm based in the northern Chinese municipality of Tianjin, will serve as the manager and GP of the new fund, a source said.

The fund aims to reach a RMB 10bn (USD 1.46bn) final close, following several phases of fundraising. Beijing-based China Guangcai will start to approach domestic corporates and financial institutions such as China Everbright Bank as potential new LPs.

“The fundraising has just started, and private sector companies will be ideal investors,” said the source. “The fund is different from other BnR-themed funds because the private sector firms will prioritise investment return prospects when picking assets.”

The fund will target infrastructure and power in BnR countries such as Laos and Russia for greenfield and brownfield investment opportunities. The manager is believed to be still finalising its investment mandate. 

B&R Taiwan Economic Association, a trade body formed to help Taiwanese businesses grow in BnR countries, will invite members to propose projects for possible investment by the fund.

Until now, most BnR infrastructure and energy projects have been dominated by state-owned developers such as CCCC and PowerChina.

To help finance the trillion-dollar scheme, the government launched the RMB 100bn Silk Road Fund, which in July acquired a 24.01% stake in a USD 3.9bn concentrated solar power project in Dubai, Saudi Arabia.

“It makes sense for private sector companies to follow in the state firms’ footsteps as they try to tap the BnR,” the source said, acknowledging however that higher risk emerging economies could deter investors with less overseas experience.

China Guangcai International already runs funds investing in the telecom, technology and tourism sectors. It is also the developer of Laos’ Boloven Economic Zone, which is expected to be five times larger than Hong Kong. Hu Deping, the eldest son of the late Communist Party general secretary Hu Yaobang, founded China Society for Promotion of the Guangcai Programme, which controls the Beijing-based investment conglomerate.  

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