The Chinese government has launched a $5-billion fund-of-funds to support small and medium enterprises in the country’s first such vehicle to be set up outside Beijing.
China’s finance ministry has teamed up with the ministry of industry and information technology to launch the joint venture company, National Small Medium Enterprises Development Fund Co., Ltd.
The joint fund was set up in Shanghai with a registered capital of 35.7 billion yuan ($5 billion) on June 22, according to an announcement.
The finance ministry has poured as much as 15.25 billion yuan ($2.2 billion) in the JV holding 42.66 per cent stake, while the remaining corpus will be contributed by 14 investors including China Tobacco, China Life Insurance, The People’s Insurance Company (Group) of China, Minsheng Roal Asset Management, Guosheng Group, Shanghai ICY Capital, China Industry and Information Technology Publishing & Media Group, among others.
The size of the vehicle is expected to grow to 100 billion yuan ($14 billion) once it rolls out a slew of sub-funds and forges partnerships with local SME funds.
China initially set up the National SME Development Fund sized at 60 billion yuan ($9.4 billion) in September 2015. The finance ministry had infused a total of 15 billion yuan ($2 billion) in the vehicle. The fund has five directors on its board representing the ministries of finance, industry and IT, science and technology, the National Development and Reform Commission, and State Administration for Industry and Commerce.
The development fund has formed four sub-funds in the past four years involving fund managers namely, Addor Capital, Oriental Fortune Capital, Shenzhen Guozhong Venture Capital Management, and THG Ventures.
The development fund has invested in about 100 emerging startups such as internet taxation service platform Huisuanzhang, EV-based lithium battery solution developer Hyper Strong, business data solution startup Tianyancha and e-signature software-as-a-service (SaaS) provider Esign.