Siemens sets up RMB vehicle

The VC arm of electronics giant Siemens has launched an RMB fund to invest directly in Chinese start-ups, taking advantage of the benefits given to corporations operating in the PRC.

Siemens Venture Capital, the venture capital arm of Germany-based Siemens, has set up an onshore China RMB vehicle for investing directly in early and expansion-stage companies, according to a firm statement.

The vehicle will be funded solely from Siemens corporate money, a Siemens VC spokeswoman told PEI, though it does not have a set target size.

Siemens follows other corporations that have already set up RMB vehicles in China, according to Larry Sussman, partner in O'Melveny & Myers' Beijing office. Aside from a large number of listed Chinese multinationals, he cited Cisco and IBM.

Intel Capital and GE Capital are active investors the region, but it is not known if they have RMB funds. Both firms were unavailable for comment.

Some corporations make RMB investments from a formal vehicle, while others make investments without forming a fund, Sussman said. When a company has an onshore presence in China already, it often has large reserves of RMB to deploy, but is not required to register the vehicle as a fund.

Siemens' fund will follow the same investment strategy as its USD counterpart, the firm said, keeping its scope to the four sectors of energy, healthcare, industry and infrastructure. The firm believes that RMB onshore investing capacity will “further enhance Siemens’ capabilities of venture capital [investment] in China”.

Siemens venture capital established its Beijing office in 2006, and since then has made at least three investments in China’s technology sector, according to their website. The firm declined to provide additional details of its investment history.

Madeline Song, Siemens VC global senior partner and head of Asia and Australia, has been named chief executive of the RMB fund, according to the statement. 

Sussman expects more corporations set up in China to follow because a local RMB investment structure “gives them more advantages that regular private equity firms don't have”, he said. For example, corporations with RMB are considered local investors, and therefore do not have to seek Ministry of Commerce approval on their investments. They can even invest directly in sensitive areas like media, he added.

Headquartered in Germany, Siemens VC has invested €800 million in more than 150 companies and 40 venture capital funds worldwide since its 1999 founding. It primarily targets businesses from which its parent company Siemens can profit, according to the statement.