The photo shows the exclusive interview of Liang Tao, the managing partner of Chenkai North American Energy Fund, Runfar US Holdings Co., Ltd., Shanghai Chenkai Investment Management Co., Ltd.
Liang Tao, general manager of Chenkai Investment Co., Ltd. Under our group accepted the exclusive interview from the reporter of Xinhua News Agency in Beijing for an article headlined as “Liang Tao: Chinese Investors shall gain the international competitiveness with their own strength”. Down below is the original text:
News in www.xinhuanet.com/energy/ on September 25 (Zhu Junping) 2015 5th Energy Summit Forum was held in Diaoyutai State Guesthouse under the theme “carrying forward the spirit of Silk Road, jointly build the road of energy”, having attracted representatives from the government, enterprises, colleges and universities, scientific research institutions, etc., for a happy gathering to jointly make comments and proposals to China’s energy industrial development. On the sideline of the summit forum, Liang Tao, the managing partner of Chenkai North American Energy Fund, Runfar US Holdings Co., Ltd., Shanghai Chenkai Investment Management Co., Ltd.
We are the financial institutions, having invested on the US small and medium-size oil companies, thus representing the image of the advanced and excellent Chinese enterprises, all of which, on the one hand, has the excellent expectation for the economic benefits, and on the other hand, assisting the Chinese entrepreneurs to improve their images. “Chinese Investors shall gain the international competitiveness with their own strength, ” said Liang Tao.
Returns beyond expectations
Reporter: Hi, would you please say something about the background for establishing the fund and the development of its current business?
Liang Tao: Our plan was initiated in 2013 when China gained the fast development in its foreign exchange reserve and the exchange rate of the renminbi against the U.S. dollar was very strong, so it remained in the better condition from the international prospective. We converted the redundant renminbi amount into US dollars for the investment in the international market, so we had a better exchange rate basis in conducting the relevant investment. Moreover, we had the reliable resources in the US energy field and also a very good team with the unique conditions, so we started to prepare for initiating such a fund.
In fact, we were faced with the greater resistance at the very start, but we were slowly accepted by others. This year, the volatility of the RMB exchange rate changed more frequently than in the past few years and RMB is gradually internationalized, so the conversion of RMB into US dollars is a macro period promising for our foreign investment, which was one of the reasons for initiating such a fund.
Reporter: You just mentioned some resistance in initiating the fund, where did they come from?
Liang Tao: From many aspects, particularly including: Firstly, many people think there are better investment opportunities in China. Where there is no remarkable Economic downturn pressure, a lot of investors do not care about the orientation and changes of the Macro economy or maybe they think China does have more opportunities. At the same time, China is confronted with the dilemma of economic downturn, so many people do not realize the existence of such a problem, which is a great resistance. In addition, in the overseas market, particularly the US, some people have a misunderstanding and hint, thinking why the US people give the profitable projects to the Chinese people. Can the Chinese investors find the profitable projects for huge investment? If this project can make a profit, why did the American people let us do it?
Furthermore, there is another major reason, which has something to do with the industrial features. In the past, oil and gas used to be a high monopoly sector. So private enterprises could hardly have the chance to edge their way into the oil and gas development and investment field. Some private enterprises could obtain the operation qualifications like the contracting model through the cooperative development, but the majority of private enterprises do not have such a condition as they lack the information and resources to seek development in this field, so most domestic investors didn’t know the investment practices and rules in the oil and gas field and they find it rather strange to make investment in such a field.
However, things have changed greatly now. Last year the invested projects turn out to be excellent in performances and we are second to none in terms of the investment returns within the US territory. This year we still make the unremitting efforts in investment, so it is believed that we can have a very good forecast for the investment return.
Strength enhances the competitiveness
Reporter: Why can you greatly improve your business ability within such a short period of time? Is it attributable to the policy environment or the development trend?
Liang Tao: The development of this team is just like “Pilgrim in the Tang Dynasty retrieving the sutras” as prescribed in “Journey to the West” to seek the continuous development and expansion on the advancing road to identify the direction and seize opportunities. In the US, the oil and gas resources for more than 4 million km2 are privately owned, so it offers the very good opportunity for investment. Sure it is very difficult, but once we can make it, others fail to duplicate it or imitate us as you can have the powerful threshold with the technical advantages and brand advantages.
In fact, now there are professionals continuing to join our core team and the company’s geographer is the first Postdoctoral researcher of CNPC in history. And there are talents continuing to join the cooperative partners and shareholders to gradually give more power to shareholders.
The world-famous private-equity group, Blackstone, has just developed from scratch, during which it continued to disintegrate, followed by some new management companies. It developed into a various series of funds in terms of the top-level structure, or even the different industrial funds. With the establishment of the brand, it has the stronger and stronger attraction, and more and more talents join in, which complies with the usual development practices with which we comply to seek our development and progress.
Reporter: Starting from this year, there appeared many energy funds in China, how do you think of it?
Liang Tao: To my best of my knowledge, the domestic energy funds, on the one hand, are the buyout funds through the cooperation with the listed companies. Say, if the listed companies purchase some business sectors, they have to obtain the review and approval from CSRC, but it is a longer period of time. However, the foreign business sectors can not await us, so the buyout funds are available, so you can buy them out and transfer them to the listed companies.
About two months ago, Ministry of Land and Resources published the notice of invitation for Bids to offer some sectors in Xinjiang to private enterprises for public bidding to allow the private enterprises to enter into the sectors which was off limits to them in the past. So against such a backdrop, it is likely some energy funds are founded against this background, but there are not quite many. Some other funds invest on extensive projects and they are likely to be involved with the investment on the new energy or natural gas, or some investment in the middle and downstream area.
Reporter: Do you intend to get back to China for business operation?
Liang Tao: Fund development is a long-term strategy. When we have achieved the US benefits, we are sure to come back to China for investment. In view of the future vision, we will not be only limited to the energy fund, but we can develop into a private equity group like Blackstone to proceed from our advantageous industry to establish the brand and cultivate the force of the investors. The energy investment can assure us to gain our investment capacity. We have the long-term plan not limited to a certain industry to study a certain industry before entering into such an industry.
In the future, we will seize some of the domestic opportunities, according to the domestic economic changes, say, education, agriculture, Biological medicine, advanced equipment manufacturing industry, environment protection, Internet of Things and Mobile Internet. As for ourselves, we don’t have the condition to immediately get access to this field for the time being. It is true that our accomplishments are easily known outside our own industry. In the coming 3-5 years, China’s economy will get out of depression and will usher in a new round of upward trend, so by then I may come back to China for investment.
We have to allocate the US dollar assets, which will be appreciated in value in the coming years, so when there appears a round of appreciation in value, we can become more mature in respect of the cultivation of investors and brands. Now we pay more attention to some domestic better opportunities and will come back to China when the proper opportunities are available to continue to develop the domestic series of funds.
Reporter: Thanks for accepting our exclusive interview.
Quoted from Xinhuanet
