Insurers Are Not Allowed to Establish PE Units

Insurance companies in China are not allowed to establish private equity investment companies but can make equity investment by directly investing in unlisted companies and investing in private equity funds, said Yang Mingsheng, vice chairman of China Insurance Regulatory Commission on Tuesday.

Mr. Yang stressed the utilization of insurance funds must abide by safety, stability and profitability principles. Insurance funds are also prohibited to invest in venture capital funds on risk concern.

CIRC in early September released interim administrative rules on insurance funds' equity investment, which stipulate that insurance funds can make invest in unlisted companies and make strict requirements for equity fund firms such as minimum CNY 100 million registered capital, have successfully exited from at least three investment projects and have not less than CNY 3 billion assets outstanding under management.

Market watchers comment with wider investment channels, insurance funds are poised to become major forces in the Chinese PE investment market besides the social security fund that had CNY 776.5 billion assets under management as at the end of 2009. The size of social security fund is expected to grow to USD 300 billion by 2015.