Investment Management
Silk Road Fund makes investment decisions in line with market principles, international practices and professional standards. A well-defined investment management mechanism has been put in place, which includes project selection, project pooling, preliminary review, interim approval, final approval and post-closing portfolio management, and risk assessment forms an integral part of the whole process.
Investment Model
Silk Road Fund adopts a professional investment model based on its overall positioning and specific project needs. It provides multi-currency investment and financing solutions to support enterprises or projects under the BRI framework, which may be at different development stages.
The Fund’s investments cover wide geographical areas and industrial sectors, tend to have relatively long life spans, and are often implemented with a diverse set of partners.
In addition to making equity investment，which is its main instrument, the Fund can also lend loans, invest in other funds, manage entrusted assets or commission others to invest.
Investment Decision-Making Process
The Investment Committee (IC) is responsible for reviewing and making decisions on the Fund’s investments in accordance with the Articles of Association and as authorized by the Board of Directors. All investment activities of the Fund are conducted based on IC’s decisions and recommendations.
With IC’s efficient operation at its core, the Fund’s standardized decision-making process is supported by a sound framework of rules and policies, extensive due diligence, as well as independent opinions provided by the legal and risk teams. These arrangements are designed to ensure rigorous investment decision making in compliance with applicable rules.
The Fund continues to improve its investment decision-making mechanism and process, in order to invest in a more scientific and effective manner.
Portfolio Management
As a medium to long-term development and investment institution, Silk Road Fund views post-closing portfolio management as a key link in a project’s life cycle, as important as the pre-closing deal work for achieving its strategic objective and value realization. The Fund’s portfolio management work is guided by its long-term objectives and featuring continuous collaboration with all stakeholders to achieve mutual benefit and value added.
During this stage, the Fund’s portfolio management team follows up on the implementation of all investment agreements, monitors the projects’ ongoing operation, responds to significant risk events, and seeks to add value to the investee companies, in order to ensure the smooth development of the projects and successful realization of the Fund’s expected returns and exits in a safe manner.
Risk Management
Drawing on experiences of international peers and based on its own business practices, the Fund has established a comprehensive risk management system in line with its strategic positioning, development goals and business characteristics. The risk prevention and control mechanism is incorporated into the whole investment process and every business line, and has been translated into specific requirements in every job responsibility.
The Fund has established a Risk Management Committee to provide overall guidance on risk management, internal control and compliance matters. It is responsible for specifying risk management objectives, strategies and systems, as well as making recommendations and decisions on risk-related matters. The Risk Management Department takes on the day-to-day responsibility for general risk management, while the Legal Department leads the efforts in setting up a compliance commissioner mechanism and ensuring that all activities of the Fund are in compliance with applicable laws and regulations. All other departments perform their relevant risk control responsibilities corresponding to their respective duties.
The Fund continues to improve its risk management system and mechanism, in order to ensure smooth operation while keeping risks under control.