Jilin Huizheng Investment Co, the first venture capital firm in Northeast China's Jilin Province, will officially start operations this month and seek a public listing on the Hong Kong Stock Exchange, according to Tuesday's China Daily.

The Changchun-based private firm, established in December, plans to buy a shell company and become listed on the Hong Kong Stock Exchange, says its Deputy General Manager Zhai Yuchun.

"Efforts to seek a listing have already kicked off," he said. "We have appointed an agency to conduct preliminary procedures."

After the firm cashed in on the petrol and oil market, its president Wang Xitian decided to make a foray into Northeast China's underdeveloped venture capital market.

Wang is also president of Jilin Haitian Industry Co, a company doing petrol and oil business.

"Compared with coastal areas, the venture capital market is unshaped here, which is not necessarily a bad thing for us pioneers," said Zhai, who believes a less competitive but profitable market is beckoning.

"Early birds get the worms," he said.

Huizheng wants to be a leading, professional investment firm in China serving small and medium-sized enterprises (SMEs).

Zhai's confidence in his business is largely based on the surging private sector in the northeastern region which has millions of SMEs.

These companies are becoming very active in participating in the massive campaign to revitalize old industrial bases in Northeast China.

Zhai said, however, SMEs in Jilin are badly in need of money as they always find it difficult to get loans from banks or in resorting to the capital market to get funds.

"Compared with coastal China, their situation is worsening," Zhai said.

"They have projects with good returns, but they are without money," he said. "What we are going to do is to provide them with startup capital."

And local government's backing for the venture capital market has boosted the firm's confidence.

An official from the SME Promotion Bureau of the provincial government said Jilin plans to nurture three to four venture capital firms to better utilize idle capital totalling some 100 billion yuan (US$12.1 billion).

Meanwhile, Zhai is fully aware of the challenges ahead.

"First, the market here is undeveloped," he said. "Very few companies have realized they can channel funds via venture capital firms."

And the company is worried that its own capital of 50 million yuan (US$6 million) is far from enough to invest in big projects.

The company plans to collect more idle money in coming months.

And the company is seeking partnerships and co-operation with overseas players to raise its financing capacity and operations.

(China Daily)