China Development Bank sets up $5bn private equity unit

China Development Financial Company will invest both directly and indirectly in the private equity asset class.

The state-backed China Development Bank (CDB) has set up a Beijing-based private equity investment unit with registered capital of RMB35 billion ($5.1 billion; €3.6 billion).

In addition to making private equity fund investments, the unit, dubbed China Development Financial Company, will also make direct investments and provide financial advisory services.

The bank said in a statement it will transfer to the unit its existing stakes in private equity funds, including holdings in the Bohai Industrial Investment Fund, China-Africa Development Fund, China-ASEAN Investment Fund, China-Italy Mandarin Fund and China-Belgium Direct Equity Investment Fund.

CDB was set up in 1994 to support China’s infrastructure development initiatives such as funding for the Three Gorges Dam and Shanghai Pudong International Airport. It also supports the state’s key industries such as power, road and railway. The bank had approximately RMB4 trillion in total assets at the end of 2008.