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Homegrown PE fund seeks 10% stake in Chengdu bank
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China's first government-backed private equity (PE) fund, Bohai Industrial Investment Fund Management Co, is vying for a minority stake in Chengdu City Commercial Bank Co to gain a foothold in the country's banking sector.


The nation's private equity frontrunner is offering 1 million yuan for a 10 percent stake in the bank - the fund's second investment, it was reported previously.


"The two sides are still negotiating on the share placement deal now, and the deal's size has yet to be finalized until the agreement is fixed," Bohai Industrial Investment Fund Management Co's spokeswoman Liu Yiming said in an interview.


An official with Chengdu City Commercial Bank's board of directors' office, surnamed Ma, said: "Bohai Fund is merely one of the domestic strategic investors we are approaching now, and we are still in the process of making selections."


Bohai's offer came on the heels of a Malaysian lender's 19.9 percent stake acquisition in the bank.


Malaysia-based Hong Leong Bank Bhd, controlled by billionaire Quek Leng Chan, agreed to pay 1.95 billion yuan to purchase 650 million new shares at 3 yuan apiece last month, the Chinese bank said in a statement on its website.


The local bank plans to issue 2 billion new shares at 3 yuan apiece to domestic and foreign strategic investors to plug a capital shortfall, it announced on its website last week.


Established in 1996, the city-level bank operates 29 branches and 114 outlets in Chengdu, capital of Southwest China's Sichuan Province.


It reported a 12.4 million-yuan profit in 2006 and 1.4 billion yuan in assets at the end of last year.


The domestic PE pioneer sealed its long-awaited first equity investment deal earlier this month, paying 1.5 billion yuan for a stake in Tianjin Pipe (Group) Corp, a steel tubing manufacturer in the northern port city of Tianjin, where the fund is based.


With a 6 billion yuan first-round capital fund under management, the nascent homegrown PE fund has sped up its search for buyout deals and has reached initial agreements with several companies from the finance, energy and manufacturing sectors, according to Ma Jun, managing director of the Bohai Industrial Investment Fund Management Co Ltd.


(China Daily November 20, 2007)

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