China Life Insurance Company and Chinese internet company Baidu have launched a $1 billion private equity fund to invest in internet and technology companies.
China Life will contribute 5.6 billion yuan ($840 million; €712 million) to the fund while Baidu will contribute up to 1.4 billion yuan, the firms said in a Hong Kong Stock Exchange statement.
China Life, through its wholly-owned subsidiaries, will manage the fund and indirectly hold 40 percent equity interest in the management company.
Baidu Fund Partnership will focus on mid- to late-stage companies in the internet sector including mobile internet, artificial intelligence, internet finance and consumption upgrade with “significant association with China”.
The fund will have an investment period of six years from the closing date.
China Life and Baidu are paying 30 percent of their capital contributions initially, the statement said.
China Life is one of China’s largest life insurance companies with total assets of 2.88 trillion yuan, while Baidu is the country’s widely used search engine provider and has a market capitalisation of close to $80 billion.
Baidu Fund Partnership is not the first tech-focused fund in Asia. In January this year the Chinese government set up a 100 billion yuan fund to back local technology companies, while Hong Kong-headquartered private equity firm China Everbright and its portfolio company Focus Media formed a $750 million technology, media and telecommunications (TMT) fund in August last year.
TMT-focused funds are also on the rise globally. Of the $264 billion raised across the entire private equity universe in the first half of 2017, 12 percent or around $33 billion was raised by tech-focused funds, according to PEI data. In the US Silver Lake Partners raised $15 billion for its fifth tech-focused fund in April and Austin-based Vista Equity Partners collected more than $11 billion for its latest software-focused vehicle. Meanwhile, SoftBank’s unprecedented $100 billion Vision Fund, the largest private equity fund to be raised if successful, is expected to hold a final close by the end of the year.