(Yicai Global) Oct. 18 -- A CNY10 billion (USD1.4 billion) fund has been formed to help rescue private listed tech companies located in one Beijing district that may be at risk of liquidation if loans they secured with pledged stock default, market insiders told Yicai Global.

Investment bank Dongxing Securities and the State-owned Assets Supervision and Administration Commission of Beijing's Haidian district, where manytech businesses cluster,have already secured an initial CNY2 billion. To tap the fund, firms will need to hand over 10 percent of their equity.

In recent months, the central government has cracked down on hidden corporate and local government borrowing, while urging them to clean up their balance sheets. Shareshave fallen amid an overly depressed market at the same time as the pressure to repay loans has grown. That has put somecompanies at risk of losing control over equity offered as loan collateral.But due to a lack of financing options, a large number of listed businesses must turn to stock pledges to raise funds for now.

Equity pledging is the main risk facing shareholders of listed enterprises, an executive at aBeijing-basedcompany said. Echoing a belief held by many market participants that bailout funds will also be available to non-tech companies, he added that theDongxing Securities-SASACfund should seek to help out more than just tech firms.

Almost 80 percent of 78 privately owned companies in Haidian have pledged more than 10 percent of their shares. Wireless broadband provider BoomSense Technology, Vantone Real Estate and landscaping services firm Qianjing have put up over 50 percent of their equity as collateral.

Other details about the fund have not been revealed, Dongxing Securities told Yicai Global, whilenone of the executives at seven listed private companies in Haidian who Yicai Global contacted had knowledge of the new fund.

Editor: Emmi Laine