18 Feb 2012

New takeover fund created by China

12:19 pm on 18 February 2012

China has created a new fund aimed at financing takeover bids abroad. The fund also seeks to boost China's currency in global financial markets.

In a statement issued on Friday, Shanghai International Group said the new fund is worth 12 billion yuan ($US1.9 billion).

Shanghai International said it was responsible for running the fund.

Bank of China deputy governor Liu Shiyu was quoted by the official Shanghai Daily newspaper as saying the fund will help domestic seek more investment opportunities abroad.

Deutsche Welle Radio reports the fund is planned to grow to 50 billion yuan, and can be boosted to 150 billion yuan through loans and bond issues.

It is also intended to promote greater use of the Chinese yuan (also known as 'renminbi') in foreign transactions.

Last week, China Investment Corporation - a State-owned fund worth $US410 billion - received a capital injection of $US50 billion from the central bank to invest in Europe and Latin America.

CIC was established in 2007. In January it bought an 8.6% stake in Thames Water, the largest water and sewage company in Britain.