China's NSSF to invest 4 bln yuan in two PE funds

TIANJIN, China, June 11 (Reuters) - China's national pension fund will invest 2 billion yuan ($290 million) in each of two domestic private equity funds being established by CDH Investments and Hony Capital.

Dai Xianglong, the head of the National Social Security Fund (NSSF), disclosed the planned investment at a financial conference in this northern port city.

A newspaper last month said the NSSF would invest 1 billion yuan in each of the two funds.

Dai said the NSSF intended to make other private-equity investments.

The NSSF, a central-government safety net for China's patchwork of underfunded provincial pensions schemes, said on June 5 it had won government approval to invest 10 percent of its assets in private equity funds.

Based on the fund's capitalised value of 516.2 billion yuan ($74 billion) in total assets by the end of 2007, the approved investment would account for about 50 billion yuan.

The NSSF has already ploughed money into some government-backed private equity funds, including the Bohai Industrial Investment Fund based in Tianjin, which Dai was instrumental in establishing when he was mayor of the city.

He said the NSSF had no plans to set up its own private equity funds, but he said he would not rule out that option in future. (Reporting by Langi Chiang; Writing by Alan Wheatley) ($1=6.919 Yuan)