Bank of China unit raising big media fund: sources

HONG KONG Wed Jul 8, 2009 9:54am EDT

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HONG KONG (Reuters) - BOC International Holdings Ltd, the flagship investment banking arm of Bank of China (601988.SS) (3988.HK), is planning to set up a private equity fund focusing on the domestic media industry, sources said on Wednesday.

A fund-raising team led by Li Tong, Deputy Chief Executive of Hong Kong-based BOC International, has been in talks with potential investors including several major state-owned media groups on the new fund in the past few weeks, said the sources.

One of the potential institutional investors, also known as "limited partners" of the new media fund, could be a major state-owned media group in southern China though no deal has been reached yet, said one of the sources.

Hong Kong-based Li Tong, who is also a managing director of BOC International, is the daughter of China's powerful propaganda chief and fifth-ranked official Li Changchun, said the sources.

The size of the new multi-billion-yuan fund is not yet fixed, pending progress in negotiations with potential investors, said the sources close to the situation.

The sources declined to be identified due as the fund-raising process is confidential. BOC International declined to comment.

Earlier this year, Chinese magazine Caijing reported China Development Bank had teamed up with the Shanghai city government to set up a private equity fund focusing on media sectors.

PROFITS NOT POLITICS

In China, traditional media industries such as television and newspapers are highly regulated by the Communist government.

Foreign media giants, such as News Corp (NWSA.O) and Walt Disney Co (DIS.N), have been making efforts to land their programs in the vast nation but have seen little progress in the past few years.

However, so-called new media firms such as already Nasdaq-listed Sina Corp (SINA.O) and Focus Media Holding Ltd FMCN.O have been growing rapidly.

These new media firms have been popular with investors partly because of their focus on profits not politics.

"Of course, new media and new technology will also be part of the investment focuses of the fund. You can't ignore new media these days," said another of the sources, adding Li's team also aimed to participate in domestic media industry consolidations.

Last year, Beijing said it was encouraging public and venture capital funds to invest in domestic new media and publishing companies before they could go public.

Last month, Shanghai Media Group, China's second-largest broadcaster, inked a partnership agreement with Japan's Softbank (9984.T).

(Editing by Jonathan Hopfner)

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