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It is an important task and exploration path for state-owned capital operation companies to improve financial service function, enlarge state-owned capital, serve the real economy, and provide new financing channels and new investment mechanism for the restructuring and transformation of central state-owned enterprises.
In September 2016, under the approval of the State Council and entrusted by State-owned Assets Supervision and Administration Commission of the State Council, China Chengtong initiated the establishment of China Structural Reform Fund (CSRF). The size of the fund is RMB 350 billion and RMB 131 billion was raised at the initial stage. The fund has invested in (including signed) 16 projects, with a total contract value of RMB 51.1 billion, of which 90% have been invested in state-owned enterprises’ projects. By playing the role of capital, CSRF facilitates state-owned enterprises’ structural reform.
In recent China United Network Communication Group Limited’s mixed-ownership reform, CSRF invested RMB 12.975 billion in the reform. Within its first year since establishment, CSRF has participated in private placement programs of Metallurgical Corporation of China Ltd., Air China Limited, The Power Construction Corporation of China, China Molybdenum Co. Ltd., in which it has pushed the structural reform of state-owned capital; CSRF has been involved in China United Network Communication Group Limited and COFCO Capital Investment Co., Ltd.’s mixed-ownership reform, in which it has promoted the activation of social capital; CSRF has been serving the central state-owned enterprises in an active manner by establishing CSRF-Aluminum Corporation of China Limited Copper Industry Development Fund, participating in Sinosteel Corporation’s debt restructuring, China Shipbuilding Industry Corporation’s debt-to-equity swaps, through which it has helped state-owned enterprises recover from financial difficulties; CSRF has been keeping abreast of the marketing need, and established Shenzhen CSRF-China Merchants Group Equity Merger and Acquisition Investment Sub-fund, participated in the cornerstone investment in China Securities Co., Ltd.’s IPO in Hong Kong, Everbright Greentech’s IPO in Hong Kong, and invested in CRRC Environmental Technology Co., Ltd. and JD Finance, through which it has played a professional role in state-owned capital’s market-oriented operation.
With CSRF as the core, China Chengtong is building up a cluster of FOF and sub-funds to support the supply-side structural reform in all aspects: joining hands with China Merchants Group and Shenzhen municipal government, China Chengtong has set up the Shenzhen CSRF-China Merchants Group Equity Merger and Acquisition Investment Sub-fund, whose target size is RMB 50 billion, with the aim of supporting state-owned enterprises to achieve transformation and upgrading, and international operation through mergers and acquisitions, and investment; cooperating with social capital, China Chengtong initiated the establishment of the largest non-performing assets investment fund in China--Chengtong Huan Non-performing Assets Investment Fund, the size of which is RMB 10 billion, with investment in bank non-performing assets, local financing platform debt and debt of central state-owned enterprises as its core business; initiating the State-owned Enterprises’ Mixed-ownership Reform Fund to fully boost the development of state-owned enterprises’ mixed-ownership economy.
In order to improve the efficiency of capital operation, and serve the real economy, China Chengtong spares no efforts in enhancing financial services, applying for financial business licenses, improving financial tools, and perfecting and improving existing financial business. China Chengtong increased its investment in Chengtong Finance Corporation Ltd., built up fund clusters with CSRF playing the leading role, improved investing and financing capability, and enlarged state-owned capital function.
China Chengtong is actively exploring ways to strengthen the public financial service functions like providing credit, capital management, corporate assets restructuring, capital operation, debt-to-equity swaps, etc. for the central state-owned enterprises through mergers and acquisitions, equity participation and other methods.
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