Establishment of the Shandong Peninsula Blue Economy Investment Fund

On 21 September 2010, a ceremony for the signing of the Shandong Peninsula Blue Economy Investment Fund ("the Blue Economy Fund") and the opening of the related management company was held jointly by CCB International (Holdings) Limited (“CCBI”) and Shandong Luxin Investment Holding Group Company Limited ("the Luxin Group") in Jinan, Shandong Province. Attending the ceremony was, among others, Wang Renyuan, Member of the Standing Committee of the Provincial CPC Committee and Executive Vice Governor of Shandong, who also met with the CCBI team led by CEO Dr. Hu Zhanghong arriving specifically to the "Spring City" for the occasion. This signing ceremony and the setting up of the management company marked the official operation of the Blue Economy Fund. The 21st century is a century of the oceans. In many coastal countries and territories, marine economy has become an important growth pole for regional development. When President Hu Jintao inspected Shandong in April 2009, he declared for the first time that marine economy should be developed vigorously, marine resources should be exploited scientifically and competitive marine industries should be nurtured so as to establish a blue economic zone in the Shandong peninsula. In order to implement these important instructions from the Central Government and to speed up the change in the mode of economic development, the Provincial CPC Committee and Provincial Government of Shandong came up with the Guiding Opinions in Establishing the Shandong Peninsula Blue Economic Zone and deployed a comprehensive strategy for driving the establishment of the zone. It is under such a background that the Luxin Group, as an important government investment platform in Shandong, joined hands with institutions such as CCBI in actively planning the setting up of an investment fund specifically for funding the development of the numerous small and medium-sized enterprises within this blue economic zone. The Blue Economy Fund is an investment fund launched overseas by Shandong Province under the theme of its blue economic zone. The scale of its first phase is US$300 million and its focus is to invest in prime unlisted companies in the blue economy zone and to nurture those it has invested for listing in capital markets both domestically and overseas. There are several “firsts” in the Blue Economy Fund. First, it is launched on an overseas platform by CCBI and the Luxin Group for raising capitals overseas to drive the development of the blue economy zone effectively. Second, its investment directions are at once flexible and practical: the Fund will invest in listed companies but will also involve business in private equities of non-listed companies; it will invest in companies planning to be listed as A shares domestically but will also support the development of those planning to list overseas; it has the full support of the government but will also consolidate the resources of local banks. Thus, it will provide a comprehensive coverage of the different types of prime enterprises in the blue economic zone. Third, the management and operation of the Fund will comply entirely with market, international and professional principles. The aim of the management company is to grow up into an investment company of excellent performance, expanding scale and increasing strength and to provide a positive momentum for the development of the blue economic zone. As one of the sponsors of the Fund, CCBI has realised rapid development of its asset management business both domestically and overseas. As at the end of June 2010, it has invested in almost 100 companies, including sector leaders such as Shimao Property, Shanshui Cement, Peak Sport Products, China Railway and Sinopharm. All told, there are more than 30 listed projects under its belt and the average rate of return is almost 60%. In recent years, CCBI has been actively expanding its private equity investment business domestically. According to the estimation of Zero2IPO Research Centre, by the end of this year, CCBI will have completed raising capitals and started operating for no less than six Renminbi funds. The establishment of the Blue Economy Fund, in particular, signifies that CCBI has made a breakthrough by expanding its private equity fund business overseas.