China Everbright bets on AI with Investcorp-backed fund

The Hong Kong-based manager is in market with its fourth New Economy Fund targeting $550m.

Investcorp-backed China Everbright is placing big bets on China’s advantage in artificial intelligence and data.

Through its New Economy Fund, which launched in September with a $550 million target, the Hong Kong-headquartered firm is planning investments in Chinese companies focused on AI, smart retail, e-commerce and internet services.

“China has more than 20 percent of the world’s data. AI, big data and cloud computing are reshaping a lot of traditional investments in the country right now,” Victor Ai, managing director of China Everbright and New Economy Fund partner, told Private Equity International. “In 10 years, AI will be much bigger than the internet.”

Ai also referred to a statement made by Sinovation Ventures founder Lee Kai-fu in a media interview in September that if data is the next oil, then China will be the next Saudi Arabia.

With more people and more data measured per person, China will be the world’s most dominant player in AI by 2030, according to a government policy report from Beijing. The State Council is bullish on AI, having unveiled an ambitious plan in December for China to be the hub of global innovation by 2030. This will include sectors like mobile payments, steering driverless cars and healthcare.

Global investors such as Investcorp are keen to take part in the AI arena. The Bahrain-listed investor made an aggregate commitment of $250 million to the New Economy Fund last month, its first investment in China since its inception in 1982.

A total $313 million of the New Economy Fund’s $550 million has already been deployed across 13 investments including in AI and facial recognition company SenseTime and food start-up MissFresh. “A big part of that capital will go towards the follow-on financings for those businesses as needed,” Investcorp co-chief executive Hazem Ben-Gacem told PEI last month. He added that the rest would be used for a handful of other individual businesses.

Ai noted that high valuations of Chinese tech companies is still a concern among the firm’s investors.

“You don’t want to buy Nike shoes for the price of a Louis Vuitton,” he said. “What is good right now is that the prices have started to come down and it will take another two to six months to [reach] the normal value.”

The next 10 months will be best time to make investments, he added.