1. Definition and Types of Guiding Fund: Ad Hoc Fund

There is no official definition for ‘Chinese Government Industrial Guiding Fund’ (hereinafter as Guiding Fund). The Guiding Fund usually refers to the government makes investment in order to attract financial institutions and social capital to jointly set up a fund, which will be used to support specific industries or areas. These ad hoc funds are established by the state and local governments for guiding the development of developing industries and innovative industries.

The Guiding Fund is policy-oriented fund that attracts social capital through equity, bonds or other ways, which is operated and managed in the way of marketization, with the aim of supporting specific industries and regions. The Guiding Fund can be divided into industrial guiding fund, venture capital and other fund (currently mainly refers to PPP fund).

2. Nature of the Guiding Fund: Private Equity Fund

The Guiding Fund is privately offered, which is essentially a private equity fund. According to the ‘Measures on Registration and Recordation of Privately Offered Investment Funds (Temporary)’published by Asset Management Association of China in December, 2014, as well as the ‘Asset Management Integrated Recommendation Platform’ of Private Equity Fund Recordation System, the Guiding Fund is categorized as equity investment fund and other fund, etc. under the class of private equity fund. 

3. Function of the Guiding Fund: Leverage Social Capital and Accelerate Industrial Upgrade

The Guiding Fund is mainly raising fund from the perspective of economic balance between the state and individuals and structural optimization, and is also guaranteed by the government. The Guiding Fund can therefore leverage social capital to provide financial support for the development of those emerging strategic enterprises such as energy conservation and environmental protection, photovoltaic, new energy, high-tech services and medicine etc., as well as high-tech industries.

- Team Merbers -

YANG Qi (Angel Young) Partner

E-mail：yangqi@zlwd.com

Ms. Yang’s practice areas are cross-border investment, private equity investment and financial technology.

WANG Lingru Partner

E-mail：wanglingru@zlwd.com

Ms. Wang is expertise is in the construction of transaction structure combining tax, finance and law, as well as M&A and cross-border tax analysis etc.

CAI Yun Partner 

E-mail：caiyun@zlwd.com

She has extensive experiences in financial sector and compliance and risk management of financial products. She is also familiar with government operating system.