Agriculture Bank of China (ABC) [1288:HK] has set up an asset management (AMC) fund with a registered capital of RMB500m in Shanghai, as reported by Caixin on August 9. The report said the business of the bank's AMC private equity fund is mainly GP (general partner), which is a debt-to-equity fund. In China, entities must set up a debt-to-equity fund in order to perform debt-to-equity swap deals. ABC will be the manager of these funds.
As early as in November 2016, ABC had already announced plans to establish a wholly-owned subsidiary, ABC Asset Management (ABC Asset) in Beijing with a total capital contribution of RMB10bn, which was proposed to specialize in debt-to-equity swap business. Later, CBRC approved the AMC unit last November. ABC's debt-sharing agreement with other enterprises is worth a cumulative RMB200bn. The market-oriented debt-to-equity swap has become one of the most important financial instruments to help enterprises reduce their leverage rate and resolve financial risks.