China Everbright, Focus Media launch $750m TMT fund

Hong Kong-headquartered China Everbright, which recently held a $264m first close on its Global Investment Fund, will invest in internet-based Chinese companies from its latest fund.

China Everbright Limited (CEL), the investment arm of China Everbright Group, has teamed up with  Nasdaq-listed Chinese media advertising agency Focus Media, to launch a RMB 5 billion ($750 million; €670 million) fund that will invest in China’s technology, media & telecommunications (TMT) sector.

CEL, which manages over $8.5 billion of assets across 33 funds, is a subsidiary of the state-owned financial conglomerate China Everbright Group.

The New Industry Investment Fund has already raised RMB 2 billion, according to a release. CEL committed RMB 800 million and Focus Media committed RMB 400 million. Chinese institutional investors contributed the remaining capital, according to a spokesperson for the firm.

The fund will invest at least RMB 50 million in TMT companies such as sports entertainment, fintech, and online-to-offline services.

CEL chief executive officer Chen Shuang said the New Industry Investment Fund “will take advantage of the industry investment opportunities brought about by China’s industry restructuring, consumption upgrading and ‘internet plus’ strategy”.

‘Internet plus’ refers to the application of the internet and other information technology in conventional industries such as manufacturing, energy, and agriculture. Chinese Premier Li Keqiang unveiled the Internet Plus plan in March 2015 to get manufacturing companies to integrate mobile internet and cloud computing big data into their businesses, as well as to get internet-based companies to increase their presence overseas.

According to PwC, China’s TMT sector saw $13.3 billion invested across 954 deals in the third and fourth quarters of 2015 driven by the internet plus strategy. Internet advertising is expected to grow from $23.2 billion in 2015 to $44.6 billion by 2020. Cinema is en route to a revenue of $15 billion by 2020, while the video games segment is set to rise from $8.9 billion in 2015 to $12.9 billion by 2020, PwC reported.

TMT investment is expected to continue in the coming years due to several factors. In terms of mobile phone penetration, China already stands at 1.3 billion or 95 handsets among 100 persons as of December 2015, according to China’s Ministry of Industry and Technology. Internet access through mobile phones in China is also widespread, with 90.1 percent of internet users using their phones for e-commerce, messaging, and online payments.

The Chinese movie-going market is also expected to surpass its North American counterpart by 2018, according to Deloitte’s TMT Predictions 2016. Box office revenues in China grew 49 percent year-on-year to $6.7 billion in December 2015, driven in part by the expansion of local cinemas.

CEL also manages several other funds. Earlier this month the Hong Kong-based firm held a first close at around $264 million for its CEL Global Investment Fund, which will invest in European and US companies looking to expand in China.

CEL is also currently investing its $200 million China-Israel vehicle, Catalyst CEL Fund, which targets Israel-based growth stage companies seeking expansion in China. The fund has made two investments so far: 3D printing company XJet and precision engineering company Lamina Technologies.