Guangzhou to launch US$3 billion bailout fund

Guangzhou plans to set up a RMB20 billion bailout fund for beleaguered publicly listed private enterprises, reports Caixin Global.

Home to more than 100 A-share companies, Guangzhou is only the latest local government to roll out plans for bailing out cash-strapped private companies mired in the country’s pledged-share crisis starting late last year.

The Guangzhou fund will expand an existing RMB3 billion mergers and acquisitions fund, which counts Guangzhou State-Owned Capital Operation Holdings Co., state-controlled beer brewer Guangzhou Zhujiang Brewery Group, auto maker GAC Group, Guangzhou Pharmaceuticals Corp., port operator Guangzhou Port Group Co. and property developer Yuexiu Enterprises (Holdings) Ltd. as its investors.

The initial subscription of 3 billion yuan has been fully paid, and the first investment project in Sunward Intelligent Equipment Co, a Shenzhen-listed but Changsha-based construction machinery manufacturer.

The choice of Sunward as the first bailout target means that the government fund won’t be limited to troubled local enterprises.

The Guangzhou government said the bailout fund will also explore ways including mezzanine financing and private equity transactions to support listed private companies with high shareholding pledges and temporary difficulties, according to Caixin. Read more