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China Baowu, others create 80B yuan fund to overhaul Chinese steel sector

WL Ross & Co. LLC, China Baowu Steel Group Corp. Ltd.'s Hwabao Investment Corp., U.S.-China Green Fund and China Merchants Finance Holdings Co. Ltd. have agreed to form an investment vehicle for steel asset acquisitions in China.

The joint venture will be called Four Rivers Investment Management Co. and expects to invest between 40 billion Chinese yuan and 80 billion yuan in the sector with a view to restructure balance sheets and create operational efficiencies, according to an April 8 release.

The fund will help the sector eliminate excess capacity, close down zombie enterprises, accelerate mergers and reorganization and promote international cooperation on production, China Baowu Chairman Ma Guoqiang said.

WL Ross and China Baowu will lead the shareholder group, and the investment committee will comprise members of WL Ross, China Baowu and senior management of the joint venture. Each shareholder will have representation on the board.

Each party has contributed 1 billion yuan as seed capital to establish the investment vehicle, Reuters reported April 7.

Hwabao Chairman Zhuping Zhou will assume the CEO role and Weihua Ma will serve as chairman.

As of April 7, US$1 was equivalent to 6.90 Chinese yuan.