Private Equity News & Analysis

China SOEs set up $4.6bn tech fund

The fund of funds will target areas such nanotechnology, smart manufacturing, artificial intelligence, and modern agriculture and transportation.

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The Beijing government along with state-owned enterprises and banks has set up a 30 billion-yuan ($4.6 billion; €3.9 billion) fund of funds vehicle that will back tech-focused funds in China and overseas.

The Beijing Municipal Government Investment Guidance Fund contributed 12 billion yuan to the fund dubbed Beijing Science & Technology Innovation Fund, while Zhongguancun Development Group, Beijing Capital Science and Technology Development Group, Beijing State-owned Capital Operation and Management Center, and Beijing Yizhuang International Investment Development each invested 2 billion yuan in the vehicle, according to a statement.

Three Chinese banks, including Bank of Beijing, Huaxia Bank and Beijing Rural Commercial Bank, have also committed 5 billion yuan, 2 billion yuan and 3 billion yuan, respectively, to the fund.

The state government-backed vehicle’s target investment areas include nanotechnology, smart manufacturing, artificial intelligence, brain-inspired intelligence, biomedicine, quantum computing, new energy, modern agriculture and transportation. It seeks to invest in up to 100 funds.

Capital raised from the fund will be divided into three categories – “original innovation”, “achievement transformation”, and “high-precision industry” – of which the allocations will be 50 percent, 30 percent and 20 percent, respectively.

Beijing Science & Technology Innovation Investment Management and Shanghai CCI Investment, co-managers of the fund, are looking to invest 5 billion yuan in about 25 to 45 funds in the first investment year (July 2018 to June 2019).

China is pushing hard to become an innovation powerhouse by 2020, as mapped out in its 13th Five-Year Plan. In 2016, the central government launched a $30 billion venture capital fund aimed at upgrading technology in the country’s ailing industrial sector.

Artificial intelligence research and innovation is among its focus areas for 2018, Chinese premier Li Keqiang said on 5 March at the 13th National People’s Congress in Beijing.