A China-backed venture plans to raise $15 billion to invest in technology companies globally, borrowing several pages from the playbook of Japan’s SoftBank, whose $100 billion Vision Fund transformed the race to identify and build the next tech giants.
China Merchants Group and peer SPF Group will join forces with London-based investment firm Centricus to launch the 100 billion Chinese yuan ($15 billion) China New Era Technology Fund, to invest or acquire firms across China and around the world.
Technology investment markets are being reshaped by private equity and sovereign wealth funds that have started bidding aggressively for assets alongside the world’s biggest venture capital firms, stoking concerns of a new private market bubble.
Dalinc Ariburnu, co-founder of Centricus, which advised SoftBank on its fund, said scale was increasingly important in the race to attract the best investments.
“The technology revolution is taking place much faster than expected and this is creating a big race for investments in this space. We are at a stage where the size of available funds and ability to access big markets will be the game changer,” he said.
Under the deal, China Merchants Capital Investment Management Co, the investment arm of conglomerate China Merchants Group, and other China-based investors will contribute up to 40 percent to the fund, the companies said in a statement.
Centricus and China-based asset management company SPF Group would form a joint venture, Centricus SPF, which will assemble international investors, they added.
CM Capital and Centricus SPF will incorporate a fund management company and invite universities and other investors, including leading technology firms, to participate in the fund.
The creation of a broader investor group follows several high-profile snubs by governments concerned about Chinese involvement in sensitive technology projects.
The Committee on Foreign Investment in the United States (CFIUS) killed the planned sale of Aixtron to China’s Fujian Grand Chip in December 2016. The plasma firm Biotest’s sale to China only went through after U.S. divestitures.