On November 4, 2006, at the Beijing Summit of the Forum on China-Africa Cooperation, Chinese President Hu Jintao announced that China would undertake eight measures to forge a new type of China-Africa strategic partnership, strengthening bilateral cooperation in more areas and at a higher level. Amongst them, the third measure was to establish a China-Africa development fund, which will eventually reach USD 5 billion, to encourage and support Chinese enterprises to invest in Africa.
The establishment of the China-Africa Development Fund embody the principles of "enhancing friendship, treating each other as equals, extending mutual support and promoting common development" in strengthening the ties between China and Africa. It accords with the interests of the governments, companies and people of Africa and China.
On March 14, 2007, the Chinese government officially approved the establishment of the China-Africa Development Fund ("The CADFund"), with first-phase funding provided by China Development Bank.
On June 26,there is a opening ceremony of the China-Africa Development Fund, and the Fund started business.
A. Fund Characteristics
CADFund aims to promote economic cooperation between China and Africa and advance Africa's economic development. By investing directly in Chinese enterprises which have set up operations in Africa or plan to invest in Africa, CADFund will push Chinese and African enterprises to reach their cooperation targets and facilitate infrastructure construction, as well as enhance the social and economic development of African countries. CADFund will embody the Chinese government's diplomatic and economic policies towards Africa and boost a new type of strategic partnership between China and Africa.
CADFund invests in the Chinese enterprises whose trade and economic activities have reached or will reach Africa and the enterprises and projects in Africa invested or to be invested by Chinese enterprises.
CADFund works differently from economic aid to Africa in that it is not allocated by nation but independently operated and based on market economy principles, the Fund invests in projects and requires investment benefits. CADFund is also different from credits, it invests together with enterprises in projects and takes the risk, by that the CADFund not increases enterprises' burden but increases entreprises financial resources. For the africain countries, CADFund will not increase their debt.
B. Management Mechanism
CADFund is independently operated and based on market economy principles, it assumes sole responsability for its profits or losses and at its own risk. Under a standardized corporate governance structure, CADFund will appoint a specialized team to manage CADFund.
C. Target Group
The target group of the China-Africa Development Fund consists primarily of Chinese enterprises whose trade and economic activities have reached or will reach Africa and the enterprises and projects in Africa invested or to be invested by Chinese enterprises. CADFund aims at promoting China-Africa ties, so all of its investments and investment targets shall comply with and conform to laws, statutes, regulations, environmental protection policies and social development policies of China and those investment recipient countries in Africa.
D. Investment Approaches and Business Scope
1. Equity investment
By equity investment, CADFund will provide support for Chinese enterprises to conduct economic and trade activities and for them to set up operations and projects in Africa. In principle, CADFund will seek for neither the majority nor the largest shareholding.
2. Quasi-equity investment
CADFund may make investments in any manner that is permitted by Chinese state policy and in line with the laws and regulations of the host countries, including but not limited to preferred stock, hybrid capital instruments and convertible bonds.
3. Fund investment
CADFund may invest, as a "fund of funds", a reasonable proportion of its capital in other funds that invest in Africa.
4. Investment management and consulting services
CADFund may provide management, consulting and financial advisory services for all types of Chinese enterprises (not limited to the financed enterprises) in order to better perform its role as a China-Africa cooperation bridge and to facilitate the exit and value maintenance of its investments.
5. Other services as approved
E. Target Industries and Fields
CADFund will focus on the following industries and fields:
1. Agriculture and manufacturing industries, which are crucial to the economic recovery and development of African countries, as well as to the enhancement of strengthening their own development competencies;
2. Infrastructure and underlying industries, such as electric power and other energy facilities, transportation, telecommunications and urban water supply and drainage;
3. Natural resources, such as oil, gas and solid mineral resources;
4. Industrial parks set up by Chinese enterprises in Africa.
F. Development Stage of the enterprise to be financed
CADFund will impose no special restrictions on the development stage of the enterprise to be financed. It can invest in newly established enterprises, enterprises needing capital to facilitate expansion or mature enterprises.
G. Period and Methods of Investment Exit
China-Africa Development Fund may consider exiting within a certain period after the investment. Its main exit methods will be: Exit after Initial Public Offering (IPO), exit after the financed enterprise goes public in domestic or overseas stock exchanges, exit through transfer agreement and by other means.
H. Application for investments of CADFund
Enterprises desiring to apply for investments of CADFund shall submit an Application Form for CADFund Project with the information of the project, project investors, total project investment and Investment amount applied for, etc. . Based on those applications submitted by the applicants and other information learned by CADFund, CADFund's investment team will preliminarily evaluate the applicants' investment projects and select investment opportunities it deems suitable for due diligence investigation for further consideration (Enterprises can get the Application Form directly from CADFund).
A African enterprise desiring to apply for investments of CADFund may look for a Chinese enterprise as partnership, and to apply for investments of CADFund by this Chinese enterprise.
Contact Information for CADFund
Telephone number: 86-10-010-88308053
Facsimile number: 86-10-88308940
Postal address: NO.29, FUCHENGMENWAI STREET, XICHENG DISTRICT BEIJING, P.R.CHINA, 10037
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