Recently, “Silk Road Gold Fund”, the special silk road fund of the largest scale in China, was launched in Xi'an. Led by Shanghai Gold Exchange (SGE), the Fund was jointly initiated by large financial institutions at home including Shandong Gold Financial Holding Capital Management Co., Ltd. (affiliated to Shandong Gold Group), Shaanxi Gold Group, and Industrial Bank (IB). With a planned scale up to RMB 100 billion and a term of 5-7 years, it is expected to become the largest special fund at home.
It is said that the “Silk Road Gold Fund” will raise and manage one FoF and a number of sub-funds, including Exchange Traded Fund, gold resource buyout fund and gold investment fund, etc. Based on market operation, it aims to build a comprehensive industry chain system covering areas such as geological exploration, mining and smelting, gold product selling, gold leasing, gold trading and gold investment.
After the foundation, the Silk Road Gold Fund may further integrate the gold industry chains along the silk road in many forms such as setting up sub-industry fund, so as to improve the gold pricing power of RMB and further push forward the internationalization of RMB.
In order to support “One Belt One Road”, IB, as the only commercial bank among the initial promoters of the Silk Road Gold Fund, has taken part in the whole initiation process of the Fund, including planning, design and determination of program. According to the introduction of relevant person-in-charge of IB, the bank has subscribed 20% shares of the Fund through its subsidiaries Industrial Fund and Industrial Trust. In the follow-up operation of the Fund, Industrial Fund and Industrial Trust will bring into play their specialized advantages to provide the Fund with a range of systemic services such as program design, management of settlement and payment, credit funds, and risk management.
The two subsidiaries of IB boast rich risk control experience and outstanding achievements in industry fund and assets management. This is why they took part in the initiation of the Fund. By the end of April 2015, the assets under the management of Industrial Fund hit the scale of RMB 246.9 billion. In the latest two years, it launched China Railway Development Fund in collaboration with China Railway Corporation (the first issue worth RMB 5 billion) and the Xiamen Investment Guiding Fund for Rail Transit Industry in collaboration with Xiamen Municipal Government (with a scale of RMB 10 billion). By the end of 2014, the assets under the management of Industrial Trust reached the scale of RMB 701.927 billion, ranking front stably in the industry.
In the future, when the Fund establishes sub-industry funds or sub-product funds, IB will mobilize its own resources by all means to look for targets for the M&A business of the sub-funds and assist the sub-funds to search and secure prior funds, so as to offer value-added services.
It is reported that the countries and regions along the “One Belt One Road” account for 80% of gold consumption in the world. In addition, of the top 100 countries in terms of gold reserve in the world, 43 are in the areas. However, the exploration and mining levels of gold mines in the areas along the “One Belt One Road” still need to be improved. An insider of the gold industry told the reporter, “the foundation of gold fund is favorable for China to conduct technology and brand output to regions and countries along the “One Belt One Road” in the area of gold exploration, radiate the influence of the country in the Silk Road Economic Belt and improve the brand influence of China gold”.
Behind the foundation of the gold industry fund is that the industrial structure of China is highly complementary with that of countries along the “One Belt One Road”. As these countries have high demands for infrastructure construction and finance, it is estimated that the bilateral trading volume will hit USD 2.5 trillion in the coming 10 years.
Facing the massive market opportunities brought by the strategy of “One Belt One Road”, IB has actively got blended into this national strategy. The Head Office established the research group of “One Belt One Road” in collaboration with the branches in the areas along “One Belt One Road” and led relevant branches to formulate the overall development planning for the areas along “One Belt One Road”. The bank increases investment in the institutional layout and resources in the areas along “One Belt One Road”, intensifies asset extension to key industries and key customers in the areas, and in terms of cooperation, offers various emerging equity financing services such as conventional credit, trade financing, cash management, bond issuing and industry fund.
Meanwhile, it also supports enterprise to go global and develop overseas market actively. “In the future, we will, at a proper time, explore to establish branches or sub-branches in the areas along “One Belt One Road” which have active RMB trading activities or share a similar culture background, or where IB enjoys certain comparative advantages, like the Southeast Asia region, and build our globalized service network steadily.” said Wang Shengqian, General Manager of the Research and Planning Department of IB.