Chinese construction machinery manufacturer Zoomlion Heavy Industry Science and Technology Co., Ltd. plans to establish an industry investment vehicle with a fundraising target of RMB3.21 billion (US$481 million) to capitalize on industrial consolidation and state-owned enterprise reforms.
China's central and local governments, as well as state-owned enterprises (SOE) and industry associations, have been launching industry M&A funds as the country continues to press on SOE reforms and industry consolidation.
Just three days ago, ten SOEs teamed up to launch a RMB350 billion (US$52.5 billion) national fund to help major state-owned enterprises restructure by industry consolidation and cutting excess capacity.
The Zoomline vehicle, named Shanghai Lulian Junhe Industrial Equity Merger and Acquisition and Investment Fund Partnership, aims to accelerate the strategic transformation and upgrade of Zoomlion, as well as to promote the development of its financial business, says a disclosure document.
A unit of Zoomlion will contribute RMB500 million to the fund, while Greenland Financial Holdings Group, Anhui Railway Development Fund, Jiangsu New Yangzi Shipbuilding, Shanghai Yu’en Environmental Technology Partnership, Shanghai Changtai Investment and others have also agreed to commit to the fund.
The vehicle, with a 2% management fee and 20% performance incentive structure, will be managed by a fund management company established by Zoomlion and its partners.
It will have an investment period of four years and an exit period of three years, amounting to a seven-year fund life.