China Development Bank (CDB), once the country's biggest policy lender, has set up an investment arm with 35 billion yuan (HK$39.71 billion) of registered capital to focus on private equity deals and consulting.
The bank, which became a for-profit joint-stock lender last year, will inject its stakes in a number of development funds and yuan-denominated private equity funds into the unit, China Development Finance.
These assets include stakes in the China-Africa Development Fund, a China-Belgium direct equity investment fund, and Tianjin-based Bohai Industrial Investment Fund Management, the mainland's first yuan-denominated fund.
Beijing has called for a diversification of corporate fund-raising channels from bank loans, trying to dilute the risks for state-owned banks as well as encouraging private sector investors to spend hoarded cash.
The authorities recently loosened restrictions on foreign private equity management firms setting up yuan-denominated funds on the mainland. Blackstone Group announced last month a plan to raise five billion yuan in a local currency fund.
Chinese banks have engaged in the direct equity investment business for a few years, mainly in the form of small-scale trust products.
