Companies

Asset managers to shake up State-owned firms

By Yang Ning and Mao Lijun (China Daily)
Updated: 2010-11-17 10:16

BEIJING - Guoxin Asset Management Company, also referred to as China Investment Corporation No 2, may be established before the end of the year, said sources from the State-owned Assets Supervision and Administration Commission (SASAC).

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With a focus on restructuring the country's central State-owned enterprises (SOEs), Guoxin Asset Management Company and SASAC will aim to turn unprofitable SOEs into money-making entities to meet the listing requirements of domestic stock exchanges, the sources said.

Guoxin Asset Management will be mainly financed by a special State-owned capital budget funded by the dividends of central SOEs.

SASAC, the sources said, may also support central SOEs to be listed as a whole group rather than separate business sections.

"The move to launch Guoxin Asset Management Company is aimed at speeding-up restructuring State-owned assets and cutting the number of central SOEs," said Liang Xiaomin, an expert on SOEs at Beijing Technology and Business University.

In July, former minister of SASAC Li Rongrong reiterated that it aimed to reduce the number of central SOEs from the current 122 to 100 by the end of this year. This means that at least 22 SOEs could be merged in November and December.

The establishment of Guoxin Asset Management Company will help the country to achieve its

Li Rongrong, former minister of the State-owned Assets Supervision and Administration Commission, reiterated in July that it aims to reduce the number of central State-owned enterprises from the current 122 to 100 by the end of this year.

restructuring goal, although the exact number of central SOEs to be placed under the control of the new company is yet to be disclosed, said Liang.

"Also, a number of smaller, less competitive central SOEs will be packaged into Guoxin Asset Management Company. I hope they will regain competitiveness after integration," he added.

The soon-to-be-formed entity will provide a platform for SASAC to package a dozen smaller central

SOEs with complementary businesses into a new company, in addition to speeding-up reforms and the restructuring of central enterprises.

The plan differs from the previous practice of reducing the number of central SOEs individually through restructuring exercises.

Once established, Guoxin Asset Management Company will be the third asset-management company under SASAC. Similar entities to Guoxin Asset Management Company are China Chengtong Group and State Development and Investment Corp.

Li Baomin, director of SASAC's research center, said earlier this month that the number of central SOEs will be cut to less than 100 within this year. A further reduction will see 30 to 50 central SOEs remain, when the 12th Five-Year Plan (2011-2015) is implemented.

These consolidated enterprises should have their own internationally renowned brands and intellectual property rights, diversified ownership structures, and global competitiveness, said Li.