Chinese insurance companies can now launch private equity funds after a recent China Insurance Regulatory Commission (CIRC) ruling, local media reported.
The insurance regulator said in a statement that the establishment of private equity funds must be in the form of limited partnerships and can raise as much as RMB2 billion ($321 million; €273 million), which should mainly be invested in small and medium enterprises in strategic emerging industries, such as the healthcare sector.
Taking advantage of the new ruling six Chinese insurance companies have joined forces to set up a RMB100 million fund. The fund will be led by Beijing-based Sun Life Everbright Asset Management, which is to commit 50 percent of the capital. The five other insurers, Anhua Agricultural Insurance Company, Chang An Property and Liability Insurance, Soochow Life Insurance Co, Kunlun Health Insurance Co and Taishan Property & Casualty Insurance Company Limited, will each contribute 10 percent.
The move to encourage insurance funds to invest in local businesses follows last year’s increase in the percent of assets insurance companies may invest in private equity, up to 30 percent from 25 percent.