Chinese venture capital firm Sinocurrent Investment Corp., and retailing to financial services company Hemei Group have agreed to form a 10 billion yuan ($1.5 billion) merger and acquisition (M&A) fund.

Under the deal, Hemei’s major shareholder, Hanqiao Machine Factory, and Sinocurrent intend to launch the fund to invest in the local retail industry.

The new fund will also form joint ventures with consumer brands operating in China to boost localisation as well as the internationalisation of Chinese brands.

As part of the deal, Sinocurrent aims to secure $291.8 million to restructure the debts of Hanqiao, thereby improving its credit status.