SIG launches RMB1bn China energy fund

The state-owned firm will invest in downstream solar power opportunities with Yingli Green Energy.

Sailing Capital, a subsidiary of China’s $20.8 billion state-owned financial conglomerate Shanghai International Group (SIG), has launched a RMB-denominated private equity fund with solar panel manufacturer Yingli Green Energy to invest in downstream solar energy projects in China, according to a statement.

The fund is targeting RMB 1 billion ($160 million; €116 million), with Yingli’s China affiliate investing 51 percent of the capital over separate installments, although both parties will take active management roles in the fund.

Yingli is listed on the New York Stock Exchange and headquartered in Baoding, China.

“Renewable energy is emerging as a strategic industry in China and around the world, and the [solar panel] segment in particular has great prospects for future development,” James Xiaodong Liu, chief executive at Sailing Capital, said in a statement.

“We are delighted to partner with Sailing Capital, a leading RMB private equity fund with robust funding resources, to accelerate our footprint in the downstream solar energy market,” executive director and chief strategy officer of Yingli Green Energy, Bryan Li, added.

While China's solar panel market has famously suffered from overcapacity, with vast quantities of intergrated photovoltaic modules (solar panels) being produced in the country over the years, the new fund will focus on downstream opportunities in the solar market, which includes the project development, distribution and installation of the panels, rather than their production.

“As a long-term strategic repositioning, this cooperation is a solid step towards our transition from a [solar panel] manufacturer to a renewable energy solutions provider,” Li continued.

Sailing Capital manages the first cross-border RMB vehicle ever raised in China, according to the firm, with its initial capital raised from external limited partners reaching RMB 12 billion ($1.9 billion). 

The firm, which SIG launched in 2011, has a wide mandate to invest across the capital structure. It can make investments in equity, structured finance, mezzanine and debt, for control or significant minority positions. Sailing also manages the Sailing Capital International Fund, a corporate vehicle worth about RMB 50 billion, according to the firm.