ARC China sets up RMB1bn fund with China’s Dalian government

The Liaoning Huayuankou Investment Fund will make pre-IPO investments in the new materials, new energy, consumer-oriented, media, healthcare, natural resources, industrial technology and aerospace sectors in the city’s Huayuankou Economic Zone.

Hong Kong-based ARC China has teamed up with the local government of Dalian to set up an RMB1 billion ($146 million; €108 million) private equity fund. This is the first such fund established in partnership with the Northeastern Chinese city, according to an ARC China statement.

It also marks the third time the firm has signed an agreement in China’s tier II and III cities to set up such funds. It is unclear which cities the other two agreements were signed with. ARC China did not respond to requests for comment at press time.

The Liaoning Huayuankou Investment Fund has a 10-year life span and will make pre-initial public offering investments in new materials, new energy, consumer-oriented sectors, media, healthcare, natural resources, industrial technology and aerospace, Wang Hai, director of the Economic Development Bureau in Dalian’s Huayuankou Economic Zone, said in a statement.

The fund’s portfolio companies will exit by listing on Shenzhen-based Growth Enterprise Market or other exchanges, Wang added.

ARC China will provide access to foreign capital for companies in the Huayuankou Economic Zone and drive local employment. Its responsibilities include the overseas marketing of local companies, advising local companies on accessing foreign capital markets and providing them with opportunities for international mergers and acquisitions and technology transfer, the firm stated.

It will also partner with clean-technology-focused Westly Group to promote China’s green technology market.

The fund is a significant move towards the setting up of a regional financial centre in Dalian and also a step towards developing Huayuankou’s industrial economy, the statement noted. The support of Dalian’s local government will greatly aid the fund and result in more high technology companies relocating to the Huayuankou Economic Zone, it added.

This follows on the launch of ARC China’s RMB fund platform in January 2010, alongside China’s National Development and Reform Commission International Corporation Centre (NDRC-ICC) and California-based venture capital firm Westly Group.

ARC China intends to raise between RMB200 million and RMB300 million each for about five RMB funds. It aims to close the funds by the second quarter of this year, Alan Chen, a senior vice president at the firm, told PEI Asia at the time.

Dalian is the second biggest city in Liaoning province after Shenyang and has a population of more than 6 million. It is one of two biannual locations for the World Economic Forum’s Summer Davos.