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China Everbright to set up European M&A infrastructure fund

China Everbright, the Chinese state-backed asset management company, plans to establish a fund specialising in European aviation, port and infrastructure mergers and acquisitions, according to press reports.14 Jan 2016

The fund will set up logistics parks in European airports and shipping terminals over the next three to five years, turning them into transhipment hubs for Chinese goods, in line with the Chinese One Belt, One Road (OBOR) strategy, China Everbright chief executive Chen Shuang told the Hong Kong Economic Journal

OBOR aims to create economic integration between countries on the former 'silk road' trading route through central and west Asia, Europe and the Middle East, and with regions on maritime trade routes including southeast Asia, Oceania and North Africa.

Beijing-based infrastructure expert Greg Jones of Pinsent Masons, the law firm behind Out-Law.com, said that this was one of many funds being set up with a view to investing in infrastructure under the OBOR plan.

"This comes on the back of a number of significant developments: the founding of CIC Capital by CIC, China’s sovereign wealth fund, for the purposes of investing in infrastructure and agricultural projects; CITIC's plan for a $20 billion OBOR fund; the Bank of China's $4bn multi-currency bond, which was issued for the explicit purpose of investing in OBOR projects; and the founding of China Insurance Investment Ltd, a $6bn fund set up by over 40 Chinese insurance companies, asset managers and private companies to fund energy and infrastructure projects," he said.

"The sources of funding for OBOR projects are really becoming quite diversified, with private investors, insurance companies, large state-owned enterprises and asset managers all involved. All this is in addition to the traditional sources such as China Development Bank and China Exim Bank, plus the multilateral lenders such as the new Asian Infrastructure Investment Bank and the BRICS (Brazil, Russia, India, China and South Africa) New Development Bank," Jones said.

China Everbright was changed from a a wholly state-owned enterprise to a joint stock company in 2014, to be jointly promoted and established by China’s finance ministry and state-owned investment company Central Huijin Investment.