CMIC enters market with $8b in assets

A 50 billion yuan ($8.14 billion) private conglomerate - China Minsheng Investment Corp Ltd - was unveiled in Shanghai on Thursday with the goal of promoting China's burgeoning private investment in domestic and overseas markets.

The company was launched by the All-China Federation of Industry and Commerce, a chamber of commerce co-founded by 59 private companies in such diverse fields as machinery, information technology, finance, new energy and e-commerce. CMIC's shareholders have combined assets of about 1 trillion yuan.

The 50 billion yuan in registered capital, which will be in place over the next three years, accounts for a stake by each shareholder of no more than 2 percent, or 1 billion yuan, and no less than 0.6 percent, or 300 million yuan, according to information provided at the opening ceremony.

On the founders' list are some of China's most renowned private companies, such as Suning Commerce Group Co Ltd and Oceanwide Holdings Co Ltd. Most, however, are lesser known investment companies with registered capital of under 2 billion yuan.

"China Minsheng Investment will be an experiment not only for China's private sector but the entire economy as well," said Dong Wenbiao, CMIC's chairman. The 57-year-old took the post after resigning as chairman of China Minsheng Banking Corp, China's first national bank to be founded by private capital.

Li Huaizhen, president of CMIC, who is also a former senior executive at CMB, said: "The diversified ownership structure ... will optimize resource allocation."

The idea of CMIC was floated by Dong in May 2013 and was approved by the central government in April. It is expected to be a private version of China Investment Corp, the country's $200 billion sovereign wealth fund.

Though it has less capital strength, CMIC has set ambitious goals in nine industries: renewable energy, iron and steel, mining logistics, real estate, property management, corporate aircraft, investment banking, strategic equity investment and overseas investment.

Some of its plans include fostering the world's second-largest aircraft company, with a fleet of 500 planes, within five years, and investing $1.5 billion in a European headquarters in London, which will bring more Chinese private capital to Europe.

"The establishment of China Minsheng Investment marks an important step in the reform of China's investment system. It also can help stimulate the vitality of social capital in the face of overall downward pressure on the economy," said Wang Jun, an economist at the China Center for International Economic Exchanges, a top think tank.

Official data showed that in the first seven months of this year, China's private investment grew by 19.6 percent, which was 3.5 percentage points slower than a year ago.

Experts have urged the government to open more monopolized sectors for private capital, but private investors proved to be no match for the State-owned enterprises.

"The monopolized industry does not automatically open its door for you," said Li, CMIC's president. "SOEs are willing to cooperate only when they recognize your advantages. Our advantage is our capital, platform, talent and flexible mechanisms. With the resources and markets of the SOEs, we can do many things."

Zhu Zhenxin, a macroeconomic analyst with Minsheng Securities Co Ltd, said one thing to watch is whether the founding of CMIC will benefit small private companies.

"With its massive scale, CMIC will be interested in small projects. But through the integration of the industrial chain, the company will also be able to bring more opportunities to downstream industries and smaller private enterprises," Zhu said.

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