China's CDB to invest in credit fund MP Pacific Harbor -FT

SHANGHAI, July 5 (Reuters) - China Development Bank (CDB) , one of the country's three policy lenders, is set to become a cornerstone investor in MP Pacific Harbor Capital, an Asian credit fund that lends to small- and medium-sized enterprises (SMEs), the Financial Times reported on Tuesday, citing unidentified sources.

The deal, which comes weeks after CDB agreed to join a group of sovereign wealth funds taking a small stake in buy-out firm TPG , will give CDB's $10 billion capital fund an economic stake in the management company and the right to co-invest in any deals to which the fund commits, the FT said.

MP Pacific Harbor Capital was jointly established by private equity firm MatlinPatterson Global Advisers and local lender Pacific Harbor, the FT said.

The fund plans to list on the Singapore Stock Exchange within 24 months, the FT added.

A spokesman at China Development Bank was not immediately available for comment.

CDB acts in accordance with Chinese government policy, and part of its recent push has been to lend more to SMEs, which Beijing wants to promote in order to give such firms a better chance of financing instead of being crowded out by loans to large state-owned companies.

As part of the deal, CDB will be able to transfer technology and send trainees to MatlinPatterson's head office in New York, the FT said.

It has also been diversifying its operations and getting more into fields such as private equity, after getting a government cash injection at the end of 2007 and shifting more towards being a commercially-oriented lender. (Reporting by Samuel Shen and Jason Subler; Editing by Jacqueline Wong)