China’s state-owned auto giant Dongfeng Motor Corporation has agreed to make a 597 million yuan ($90 million) commitment to a motor industry equity investment fund, said a company filing to the Stock Exchange of Hong Kong on Monday.
Dongfeng inked an agreement with Bank of Communications’ BOCOM International Holdings, BOCOM International’s Shanghai Bole, Dongfeng’s subsidiary Yuanjing Investment, and Wuhan Jingkai Industry Fund Management, to set up the investment fund.
The Dongfeng Bocom Yuanjing Motor Investment Fund (Wuhan) Partnership has already received commitments of 1.6 billion yuan ($244 million) from various partners.
The two limited partners (LPs) Dongfeng and BOCOM International will contribute $90 million each, and will each hold a 37.31 per cent stake. The third LP, Wuhan Jingkai Industry Investment Fund Management, will invest 400 million yuan ($61 million) and will hold 25 per cent equity.
The rest will be shared by the two general partners Shanghai Bole and Yuanjing Investment.
Upon the completion of the transaction, BOCOM International will serve as the fund manager and Yuanjing Investment will be its executive partner.
With the fund, the parties will bet on the automobile industry’s niche areas of electrification, intellectualisation, network products, and sharing platforms. Besides, they will also target novel technologies — cloud computing, big data, internet of things, mobile communication, AI, and multi-mode power sources.
Founded in 1969 and managed by the state-owned Asset Supervision and Administration Commission of the State Council, Dongfeng has been specialising in the businesses of commercial and passenger vehicles such as buses, trucks, and SUVs. In addition, the Wuhan-based company has engaged in sectors like auto imports and exports, used-car trading, and insurance brokerage business.
One of China’s largest auto groups, Dongfeng was listed in Shanghai in 1999, and Hong Kong in 2005.
The latest investment fund is aimed at “making full use of the advantages of the company and BOCOM International Holdings in the automobile industry and the capital market respectively, to achieve mutual benefits and alliance between giants,” said the company in the statement.
Set up by its parent company Bank of Communications in 1998 in Hong Kong, BOCOM International has engaged in fields of securities brokerage, margin financing, corporate finance and underwriting, investment and loans and asset management and advisory businesses.