Ban lifted on direct investment by Chinese brokerages

Two Chinese brokerages have been given the go-ahead to make direct equity investments, marking the end of a ban on local brokerages making private equity-style investments, the Wall Street Journal reported. China International Capital Corp (CICC) and CITIC Securities are the two firms that have received approval from the China Securities Regulatory Commission to make investments. CITIC Securities said in a stock exchange filing Tuesday that its direct equity stakes will be made through a wholly-owned company backed by US$110.52 billion of the brokerage's funds. This represents a departure from the normal process by which private equity firms invest money on behalf of limited partners. Known as Golden Time Investment, CITIC's company will focus on buying stakes in companies that are planning share offerings. CICC said it was still considering its options.