China's SWF and Exim Bank Team Up in $1 Billion PE Fund

(September 15, 2010) — The Bank of China and China’s sovereign wealth fund – the roughly $332.4 billion China Investment Corp – have joined to start a $1 billion private equity fund to invest in Southeast Asian infrastructure and new energy projects.

The deal adds to the list of indications pointing to China’s burgeoning importance in the area. Both the policy bank and CIC have each invested $300 million in the fund, which aims to raise $10 billion in total over the next eight years, Exim Bank Vice President Zhu Xinqiang said, the Wall Street Journal reported. In recent years, Exim Bank and the CIC have become important vehicles in the financing of China’s overseas development strategy.

In other news regarding the region, investor sentiment toward China has grown more bullish in just a month, according to a Bank of America Merrill Lynch September survey of 177 global fund managers. According to the research, while survey respondents were neutral toward the US, eurozone, UK and bearish toward Japan, 11% of respondents this month said China’s economy will strengthen over the next year.

“Renewed optimism in Chinese economic growth provides some hope of an improvement in investor sentiment in the coming months. The question is whether China is a sufficient catalyst to spark a change,” Michael Hartnett, chief global equities strategist at BofA Merrill Lynch Research, said in a news release.