CIPEF

PE key fuel for business

By Tuo Yannan (China Daily)
Updated: 2010-06-11 07:48

The opening ceremony of the ongoing China International Private Equity Forum in Tianjin. Photos by Zhang Wei/ China Daily

Chinese economists and officials praised the bright prospects for financing and investment through private equity (PE) funds in Tianjin yesterday.

PE investment can help fuel enterprises' growth, said Cheng Siwei, former vice-chairman of the Standing Committee of the National People's Congress, at the 4th China International Private Equity Forum (CIPEF).

"The significance of PE funds lies in not running enterprises, but fueling enterprises' development through acquiring equity, listing and other capital-related operations," Cheng said.

He said that financial innovation is a priority for the country's economic activities. Although there are problems with investment banks, they are still irreplaceable market forces to aid running enterprises.

Dai Xianglong, chairman of the National Council for Social Security Fund, shared similar views as Cheng, emphasizing that PE funds are facing golden opportunities in China, and can help enterprises grow.

"No matter funds from home or abroad, they can find a space in China," Dai said.

The State Council is currently working on a regulation, aimed at better governing the development of PE funds in China.

China holds huge foreign reserves and can do more to invest abroad, and further diversify its financial investment portfolio, Dai said.

China has to accelerate RMB's pace of internationalization, and switch the economic growth pattern from good-oriented export into capital-oriented export and investment, and further enhance the quality of export products and services, Dai said.

The ex-governor of China's central bank commented that during the post-financial crisis era, China became the preferential choice for foreign direct investors.

"China's foreign direct investment (FDI) dropped from US$1,900 billion to $1,200 billion after the financial crisis broken out, but it has been recovering slowly. We have already seen signs of revival," Dai said.

As the global economy shows signs of gradual recovery, financing activities by enterprises are picking up, which offer new opportunities for private equity (PE) funds, said Huang Xingguo, mayor of Tianjin Municipality, the host of CIPEF.

The forum is to commit itself to serve as a comprehensive platform for enterprise financing, especially equity financing.

"We are committed to developing Tianjin into the national center for equity investment fund issuance, management, exchange, information and personnel training," Mayor Huang said.

(China Daily 06/11/2010 page18)