UPDATE 1-Ping An to launch private equity fund - sources

SHANGHAI, March 17 - Ping An Insurance (Group) Co of China plans to launch a private equity arm this year with initial capital of 20 billion yuan ($2.93 billion), two sources with direct knowledge of the plan said on Tuesday.

The fund, to be called Ping An Capital, will focus on direct equity investments in non-listed companies, as well as investments in corporate bonds, infrastructure projects such as bridges and ports, and real estate projects, the sources said.

China has been encouraging private equity investment as an additional source of corporate funding, as banks become cautious in lending to the private sector while initial public equity offerings have dried up during an extended market downturn and the global financial crisis.

China's insurance regulator said last month it would expand investment options for insurance companies, including to investments in non-listed companies, to help them improve returns during the financial crisis.

Ping An, China's second-largest insurer, also operates a bank, a trust unit and a brokerage, and its chairman Peter Ma has laid out ambitious plans to expand as a full-range financial conglomerate.

The company is now applying for regulatory approvals for the private equity fund, which are expected to be granted soon, the sources said. They asked not to be named because they were not authorised to talk to the media. ($1=6.838 Yuan)