China approves country's first buyout fund

China's first domestic buyout fund is all set for launching after China Securities Regulatory Commission approved CITIC Securities' application for it.


The fund, to be managed by a subsidiary called Goldstone Investment, will start with an initial investment of more than 5 billionyuan or $786.84 million, but plans to expand up to 20 or 30 billion yuan, according to Goldstone CEO Qi Shuguang.

In addition to providing an alternative to bank lending, buyout funds can serve as exits for private equity firms and can help buy out listed companies that want to go private.

Goldstone will primarily raise funds from institutional investors.

While CITIC said the fund will be the country's first "buyout" fund, a similar "PE fund" application by China International Capital Corporation was approved in May 2011.

Many more fund management companies have applications to launch such funds awaiting approval from the CSRC, including Guotai Securities, Galaxy Securities and Haitong Securities, as Beijing is moving to support its struggling mutual fund industry.

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