BlackRock will launch the fund jointly with China Investment Corporation (CIC), a wholly state-owned company based in Beijing.
CIC was set up in September 2007 with a RMB 1.55trn bond issuance by the Ministry of Finance. These bonds were subsequently used to by around $200bn of its country’s foreign exchange reserves.
The new proposition will be run by Liu Erfei who is to leave his current role as chairman of Bank of America Merrill Lynch’s business in China.
As yet the fund has no name, nor is it known exactly where it will allocate its monies although it is expected to invest directly in China or in companies that would benefit China.
The first report of this proposed launch – that has since been corroborated by a spokesperson at BlackRock – was made in yesterday’s Financial Times. It added that the CIC is under pressure to use capital more quickly and generate greater returns.
At the same time, BlackRock will be able to increase its presence in Asia that is currently little more than a small footprint in Japan.
The firm recently announced that Mark McCombe, chairman of BlackRock in Asia, will oversee the retail business in that region.