Shanghai-headquartered Softbank China Venture Capital is reportedly set to launch its first RMB-denominated private equity fund with an initial target size of RMB2 billion ($293 million; €229 million).
The firm wants to complete fundraising for the vehicle by early next year, garnering commitments largely from Chinese limited partners, according to a Reuters report. It is expected that the city government-owned Shanghai Pudong Science and Technology Investment Company, which was founded in 1999, will be one of the major limited partners in the fund.
Softbank China will work with an investment arm of the Shanghai city government to launch the fund.
Investments will be made in fast-growing high technology sectors in China, particularly in Shanghai’s Pudong New Area. It will also invest selectively in new energy, new material and manufacturing sectors.
A few of Softbank China Venture Capital’s investments include Alibaba.com, an e-commerce company; Mobile2Win, an interactive brand marketing company; Taobao.com, a consumer-to-consumer trading website; Focus Media, China’s largest outdoor audiovisual advertising company; Afond Technologies, a semiconductor design company; and Cellon International, which provides design and systems integration services to the wireless handset industry.
RMB-denominated funds are becoming increasingly popular in China as authorities there loosen regulations pertaining to the creation of such vehicles. The first such funds were set up by the state. As of today, there are a number of RMB-denominated funds active in the country, most of which are managed either by provincial and city governments or by third party entities that have been created by the same.
Lately however, private players in the asset class have also been permitted to launch RMB-denominated funds. Hony Capital and CDH Investments are currently raising funds denominated in the local currency. Citic Capital is another alternative assets investor that, according to market sources, is setting up an RMB-denominated fund.
Softbank China Venture Capital did not respond to requests for a comment.