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"Nothing Ventured, Nothing Gained," Says Jiangsu Who Eclipses Other Chinese Provinces

Shenshen Updated June 18, 2021

 

Sitting at a strategic location of Yangtze River Delta, Jiangsu province is thinking big picture to spur the integrated development of the booming city cluster. Top of mind is to connect industrial chains and accelerate internal circulation – the domestic hyper-cycle of production, distribution, and consumption. But with raising private capital becoming increasingly challenging, Jiangsu follows many Chinese provinces by launching a wealth of government-guided funds (GGFs).

 

Unlike Beijing, Shanghai or Guangzhou, Jiangsu doesn’t pick just one key area for establishing GGFs. Instead, it goes intra-provincial with big moves one after another. On January 6, 2021, the Jiangsu Provincial Department of Finance issued the Notice on Strengthening and Standardizing the Management of Government Investment Funds. This landmark policy states the local government will avoid daily management of the GGFs and replace more budgetary allocation with equity investment.

 

These government-backed and other private equity (PE) funds are transforming the province. According to an impressive Jiangsu PE funds report released by the local branch of the Asset Management Association of China (AMAC), by the end of April 2021, there were 1,173 private fund managers in Jiangsu, representing assets under management (AUM) of CNY93.614 billion. 77.2% are PE/venture capital (VC) fund managers, accounting for 90.7% AUM.

 

As a result, Jiangsu - one of the most actively developing provinces in China - remains the second-largest GDP contributor in 2020.

 

The Crown Jewel of Jiangsu: Suzhou City

 

Suzhou is the shining star of Jiangsu. On January 4, 2021, Suzhou officially launched the CNY6-billion Suzhou angel investment GGF, injecting fresh capital into seed-stage and start-up tech companies in emerging industries, especially the digital economy. Also in January, 2020, Suzhou announced a CNY2-billion angel investment fund of funds (FoF) and a CNY10-billion GGF.

 

Suzhou has led the practice of supporting start-ups as early as 2014 when the Suzhou Science and Technology Bureau formulated the Implementation Measures for Suzhou Angel Investment GGF. And in 2015, Suzhou released the Detailed Rules for Stage Shareholding by Suzhou Angel Investment GGF (Trial Implementation). GGFs invest in VC firms to guide the investment direction and cash out at an agreed time to make room for private capital, hence the concept of GGF stage shareholding.

 

By 2020, after six years of exploration, Suzhou has initiated 29 GGF stage shareholding projects and established 22 sub-funds. The total capital paid in reached CNY1.96 billion, including GGF stage shareholding of CNY289 million, which has attracted private capital 6.78 times its size.

 

On May 6, Suzhou issued Several Measures to Promote the Sustainable and High-Quality Development of Suzhou Equity Investment that includes:

 

  • A maximum reward of CNY20 million for qualified PE/VC firms, according to the situation of their invested companies in that year;

  • A maximum subsidy of CNY5 million for investment companies to invest in tech startups, according to the actual investment amount;

  • A maximum reward of CNY5 million for any investment managers to conduct direct investment into Suzhou-located companies. The number is calculated as 3% to 5% of investment managers’ newly added investment in that year.

 

The good news goes on. On November 3, 2020, the Xiangcheng district of Suzhou city officially launched the CNY5-billion Xiangcheng FoF II.

 

On February 28, 2021, Legend Capital launched its sixth RMB-denominated growth fund with a total scale of CNY10 billion in Xiangcheng District.

 

On May 8, Suzhou International Equity Investment Summit witnessed the launching of 26 funds with a total amount of over CNY60 billion. This involves Suzhou Angel Investment FoF, rural revitalization funds, sector-focused funds, Suzhou free trade area QFLP funds and others.

 

On May 31, 2021, Oceanpine Capital announced a CNY2-billion deep tech fund in Xiangcheng, Suzhou. The fund received capital commitments from multiple GGFs and FoFs of Xiangcheng District and Xiangcheng Development Zone, besides well-known corporate investors.

 

The Shining Capital of Jiangsu: Nanjing City

 

On January 21, 2021, a CNY10-billion FoF was officially established in the Nanjing Jinyuzui fund block. The fund is jointly established by Nanjing Communications Group and its fund manager subsidiary, Nanjing Communication Industry Group, Nanjing Highway Development Group, and Nanjing Railway Construction Investment Company.

 

Among them, Nanjing Communication Industry Group will strengthen “traffic plus” (like China’s Internet Plus) investment. It plans to establish a new market-oriented sub-fund of no less than CNY2 billion per year to actively invest in infrastructure in Nanjing and the surrounding areas and leverage CNY20 billion through the FoF and sub-fund structure.

 

FOF Weekly understands that the Nanjing Jinyuzui fund block, opened in 2019, is the first fund-labelled block in Nanjing that has gathered various funds and related institutions. Now it has developed into a destination of new finance and a support center for innovation and entrepreneurship. In its plan, the Jinyuzui fund block will partner with another 10-20 top PE/VC houses, step into online live-streaming and upgrade roadshow venues in 2021.

 

On February 9, 2021, Nanjing Chuangyi Huizhi Venture Capital (limited partnership) funded by Jianye District Science and Technology Fund was officially established. The fund is a CNY100-million market-oriented angel fund jointly launched by Shanghai-based Histtone Capital and Ginda Industrial Investment Group. It mainly invests in environmental protection and green science and technology.

 

On March 18, Pukou District of Nanjing established integrated circuit (IC) GGFs with a total scale of over CNY20 billion. On top of leveraging GGFs, Pukou District innovatively created the “fund + industry + industrial park” pattern, striving to forge dominant industries such as IC. On that very day, agreements on 22 industrial projects (CNY16.2 billion), 9 fund cooperation projects (CNY9.2 billion), 1 industrial application project (CNY1 billion) and 2 scientific research projects were also signed.

 

Pukou District is reported to be speeding up its plan to build a “chip stronghold” in Nanjing, hatching a globally influential IC industry at the CNY100-billion level.

 

Nanjing Jiangbei New Area also recently announced that it will invest CNY20 billion to establish an FoF soon. And altogether, CNY50 billion will be invested throughout the 14th five-year plan to build a new finance center and drive the industrial development of the new area.

 

“For Nanjing Jiangbei New Area, developing the finance industry is not only for finance but also to stimulate the development of the integrated circuit and biomedical industry,” says Chen Chanmei, deputy director of the management committee of Nanjing Jiangbei New Area.

 

It is reported that in the past five years, 937 industry investment funds have taken Nanjing Jiangbei New Area as their home, representing AUM of CNY500 billion. More than 60 of those are backed with state-owned capital by the local government, which has injected capital into over 200 portfolio firms. Altogether, Nanjing had 11 new public companies in 2020, and Nanjing Jiangbei New Area contributed 5, with 27 more to be listed.

 

The Late Bloomer of Jiangsu: Wuxi City

 

As one of the central cities in the Yangtze River Delta, Wuxi has developed its semiconductor industry rapidly in recent years. Indeed, the IC industry has given it the nickname the “Huangpu Military Academy” for generating trained talents. Wuxi once produced the first made-in-China chip and is now top 3 in China for its IC industry scale in general. And within IC, it tops the country’s leaderboards: seal test scale (top 1), supporting industries (top 1), manufacturing scale (top 3) and design scale (top 5). Signature companies in Wuxi include CETC, Maxscend, SK Hynix, Huahong Semiconductor (Wuxi), JCET and so on.

 

In 2021, Wuxi is starting to target digital and big health industries. On January 23, Jiangsu Digital Culture Education Fund, the first digital education GGF in China, was established in Wuxi Studios. Focused on all things digital – education, culture, intelligence technology, etc. – the fund totals CNY5 billion. Furthermore, top investment companies, such as Hillhouse Capital, Tencent, Temasek and Zhongzhi Enterprise Group will join hands to invest in the promising sector of digital culture education in Wuxi and then guide others to join in.

 

“Wuxi takes biomedicine as a strategic emerging industry and will pay large attention to its development. Dedicated to building a world-class biomedicine industry chain, Wuxi has formulated and implemented a series of policies such as the Three-Year Action Plan. This has helped Wuxi to attract and harbor more than 1,000 biomedical enterprises, AstraZeneca and Wuxi App Tech included. The biomedicine industry in Wuxi has exceeded CNY100 billion in scale, and we are striving to make it CNY250 billion by 2025,” says Huang Qin, Wuxi Municipal Party Secretary, at the Taihu Bay Future Healthcare Conference on April 22, 2021.

 

As Huang Qin explains, 144 VC firms have already established biomedicine funds in Wuxi, with a total size of CNY60.3 billion. “Wuxi has also been mobilizing resources to set up a FoF of over CNY60 billion, specializing in key sectors such as biomedicine.

 

The Rising Stars of Jiangsu: Changzhou and Xuzhou

 

On March 17, 2021, Liyang Government Investment Fund, a local and the biggest GGF in Liyang, was established with a total size of CNY10 billion. Focused on energy storage and smart IoT, the fund will promote the rapid growth of small and medium-sized startups and projects in Liyang, a county-level city in Changzhou.

 

On April 26, 2021, Xuzhou Municipal Government Investment Fund (limited partnership) was jointly established by the Xuzhou Municipal Finance Bureau and a fund manager subsidiary of Guosheng Group. The fund, with its focus on six strategic emerging industries in Xuzhou, received a total subscription of CNY4.5 billion.

 

In February 2021, Jiangsu province and the Xuzhou government also established the Huaihai Economic Zone Investment Fund. This is the first intra-provincial but cross-regional cooperative development fund in China, creating a new model for government investment funds to support regional collaborative development.

 

Xuzhou GGF has also shown an eye-opening grade report in recent years. To learn more about Xuzhou GGF, you can read FOF Weekly’s previous article.

 

To Sum Up

 

With all this development, Jiangsu province is transforming the Yangtze River Delta, taking the lead in connecting industrial chains and rapidly advancing the domestic hyper-cycle. By launching GGFs across the province, it is invigorating the local PE/VC industry.

 

Hefei has recently gone viral on the internet for its adventurous venture investment style, and now there is Jiangsu, delivering the fruits of investment across the province.

 

Generally speaking, raising private capital has been increasingly challenging, thus these government-led funds are turned to more often nowadays in China. Thanks to its strong GGFs and PE funds, Jiangsu has seen its semiconductor and biomedicine industry gradually develop and expand.

 

What will be next? Jiangsu has the answer.


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Already have an account? Sign in!
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CHINA-BASED
GLOBAL PLATFORM
FOR GPs & LPs
FOF WEEKLY Account terms of service
1. Members registered in this website must abide by the provisions on the administration of Internet electronic announcement service, and shall not publish information such as defamation of others, invasion of others' privacy, infringement of others' intellectual property rights, spread of viruses, political speech, commercial information, etc.
2, in all the articles published in the site, the site has the final right to edit, and reserve the right to print or publish to a third party, if your information is not complete, we will have the right to use your work published in the site without any notice.
3. During the registration process, you will choose the registration name and password. The choice of registration name shall comply with laws, regulations and social ethics. You must keep your password confidential and you will be responsible for all activities that take place under your registered name and password.
Already have an account? Sign in!
E-mail adress

"Nothing Ventured, Nothing Gained," Says Jiangsu Who Eclipses Other Chinese Provinces

Shenshen Updated June 18, 2021

 

Sitting at a strategic location of Yangtze River Delta, Jiangsu province is thinking big picture to spur the integrated development of the booming city cluster. Top of mind is to connect industrial chains and accelerate internal circulation – the domestic hyper-cycle of production, distribution, and consumption. But with raising private capital becoming increasingly challenging, Jiangsu follows many Chinese provinces by launching a wealth of government-guided funds (GGFs).

 

Unlike Beijing, Shanghai or Guangzhou, Jiangsu doesn’t pick just one key area for establishing GGFs. Instead, it goes intra-provincial with big moves one after another. On January 6, 2021, the Jiangsu Provincial Department of Finance issued the Notice on Strengthening and Standardizing the Management of Government Investment Funds. This landmark policy states the local government will avoid daily management of the GGFs and replace more budgetary allocation with equity investment.

 

These government-backed and other private equity (PE) funds are transforming the province. According to an impressive Jiangsu PE funds report released by the local branch of the Asset Management Association of China (AMAC), by the end of April 2021, there were 1,173 private fund managers in Jiangsu, representing assets under management (AUM) of CNY93.614 billion. 77.2% are PE/venture capital (VC) fund managers, accounting for 90.7% AUM.

 

As a result, Jiangsu - one of the most actively developing provinces in China - remains the second-largest GDP contributor in 2020.

 

The Crown Jewel of Jiangsu: Suzhou City

 

Suzhou is the shining star of Jiangsu. On January 4, 2021, Suzhou officially launched the CNY6-billion Suzhou angel investment GGF, injecting fresh capital into seed-stage and start-up tech companies in emerging industries, especially the digital economy. Also in January, 2020, Suzhou announced a CNY2-billion angel investment fund of funds (FoF) and a CNY10-billion GGF.

 

Suzhou has led the practice of supporting start-ups as early as 2014 when the Suzhou Science and Technology Bureau formulated the Implementation Measures for Suzhou Angel Investment GGF. And in 2015, Suzhou released the Detailed Rules for Stage Shareholding by Suzhou Angel Investment GGF (Trial Implementation). GGFs invest in VC firms to guide the investment direction and cash out at an agreed time to make room for private capital, hence the concept of GGF stage shareholding.

 

By 2020, after six years of exploration, Suzhou has initiated 29 GGF stage shareholding projects and established 22 sub-funds. The total capital paid in reached CNY1.96 billion, including GGF stage shareholding of CNY289 million, which has attracted private capital 6.78 times its size.

 

On May 6, Suzhou issued Several Measures to Promote the Sustainable and High-Quality Development of Suzhou Equity Investment that includes:

 

  • A maximum reward of CNY20 million for qualified PE/VC firms, according to the situation of their invested companies in that year;

  • A maximum subsidy of CNY5 million for investment companies to invest in tech startups, according to the actual investment amount;

  • A maximum reward of CNY5 million for any investment managers to conduct direct investment into Suzhou-located companies. The number is calculated as 3% to 5% of investment managers’ newly added investment in that year.

 

The good news goes on. On November 3, 2020, the Xiangcheng district of Suzhou city officially launched the CNY5-billion Xiangcheng FoF II.

 

On February 28, 2021, Legend Capital launched its sixth RMB-denominated growth fund with a total scale of CNY10 billion in Xiangcheng District.

 

On May 8, Suzhou International Equity Investment Summit witnessed the launching of 26 funds with a total amount of over CNY60 billion. This involves Suzhou Angel Investment FoF, rural revitalization funds, sector-focused funds, Suzhou free trade area QFLP funds and others.

 

On May 31, 2021, Oceanpine Capital announced a CNY2-billion deep tech fund in Xiangcheng, Suzhou. The fund received capital commitments from multiple GGFs and FoFs of Xiangcheng District and Xiangcheng Development Zone, besides well-known corporate investors.

 

The Shining Capital of Jiangsu: Nanjing City

 

On January 21, 2021, a CNY10-billion FoF was officially established in the Nanjing Jinyuzui fund block. The fund is jointly established by Nanjing Communications Group and its fund manager subsidiary, Nanjing Communication Industry Group, Nanjing Highway Development Group, and Nanjing Railway Construction Investment Company.

 

Among them, Nanjing Communication Industry Group will strengthen “traffic plus” (like China’s Internet Plus) investment. It plans to establish a new market-oriented sub-fund of no less than CNY2 billion per year to actively invest in infrastructure in Nanjing and the surrounding areas and leverage CNY20 billion through the FoF and sub-fund structure.

 

FOF Weekly understands that the Nanjing Jinyuzui fund block, opened in 2019, is the first fund-labelled block in Nanjing that has gathered various funds and related institutions. Now it has developed into a destination of new finance and a support center for innovation and entrepreneurship. In its plan, the Jinyuzui fund block will partner with another 10-20 top PE/VC houses, step into online live-streaming and upgrade roadshow venues in 2021.

 

On February 9, 2021, Nanjing Chuangyi Huizhi Venture Capital (limited partnership) funded by Jianye District Science and Technology Fund was officially established. The fund is a CNY100-million market-oriented angel fund jointly launched by Shanghai-based Histtone Capital and Ginda Industrial Investment Group. It mainly invests in environmental protection and green science and technology.

 

On March 18, Pukou District of Nanjing established integrated circuit (IC) GGFs with a total scale of over CNY20 billion. On top of leveraging GGFs, Pukou District innovatively created the “fund + industry + industrial park” pattern, striving to forge dominant industries such as IC. On that very day, agreements on 22 industrial projects (CNY16.2 billion), 9 fund cooperation projects (CNY9.2 billion), 1 industrial application project (CNY1 billion) and 2 scientific research projects were also signed.

 

Pukou District is reported to be speeding up its plan to build a “chip stronghold” in Nanjing, hatching a globally influential IC industry at the CNY100-billion level.

 

Nanjing Jiangbei New Area also recently announced that it will invest CNY20 billion to establish an FoF soon. And altogether, CNY50 billion will be invested throughout the 14th five-year plan to build a new finance center and drive the industrial development of the new area.

 

“For Nanjing Jiangbei New Area, developing the finance industry is not only for finance but also to stimulate the development of the integrated circuit and biomedical industry,” says Chen Chanmei, deputy director of the management committee of Nanjing Jiangbei New Area.

 

It is reported that in the past five years, 937 industry investment funds have taken Nanjing Jiangbei New Area as their home, representing AUM of CNY500 billion. More than 60 of those are backed with state-owned capital by the local government, which has injected capital into over 200 portfolio firms. Altogether, Nanjing had 11 new public companies in 2020, and Nanjing Jiangbei New Area contributed 5, with 27 more to be listed.

 

The Late Bloomer of Jiangsu: Wuxi City

 

As one of the central cities in the Yangtze River Delta, Wuxi has developed its semiconductor industry rapidly in recent years. Indeed, the IC industry has given it the nickname the “Huangpu Military Academy” for generating trained talents. Wuxi once produced the first made-in-China chip and is now top 3 in China for its IC industry scale in general. And within IC, it tops the country’s leaderboards: seal test scale (top 1), supporting industries (top 1), manufacturing scale (top 3) and design scale (top 5). Signature companies in Wuxi include CETC, Maxscend, SK Hynix, Huahong Semiconductor (Wuxi), JCET and so on.

 

In 2021, Wuxi is starting to target digital and big health industries. On January 23, Jiangsu Digital Culture Education Fund, the first digital education GGF in China, was established in Wuxi Studios. Focused on all things digital – education, culture, intelligence technology, etc. – the fund totals CNY5 billion. Furthermore, top investment companies, such as Hillhouse Capital, Tencent, Temasek and Zhongzhi Enterprise Group will join hands to invest in the promising sector of digital culture education in Wuxi and then guide others to join in.

 

“Wuxi takes biomedicine as a strategic emerging industry and will pay large attention to its development. Dedicated to building a world-class biomedicine industry chain, Wuxi has formulated and implemented a series of policies such as the Three-Year Action Plan. This has helped Wuxi to attract and harbor more than 1,000 biomedical enterprises, AstraZeneca and Wuxi App Tech included. The biomedicine industry in Wuxi has exceeded CNY100 billion in scale, and we are striving to make it CNY250 billion by 2025,” says Huang Qin, Wuxi Municipal Party Secretary, at the Taihu Bay Future Healthcare Conference on April 22, 2021.

 

As Huang Qin explains, 144 VC firms have already established biomedicine funds in Wuxi, with a total size of CNY60.3 billion. “Wuxi has also been mobilizing resources to set up a FoF of over CNY60 billion, specializing in key sectors such as biomedicine.

 

The Rising Stars of Jiangsu: Changzhou and Xuzhou

 

On March 17, 2021, Liyang Government Investment Fund, a local and the biggest GGF in Liyang, was established with a total size of CNY10 billion. Focused on energy storage and smart IoT, the fund will promote the rapid growth of small and medium-sized startups and projects in Liyang, a county-level city in Changzhou.

 

On April 26, 2021, Xuzhou Municipal Government Investment Fund (limited partnership) was jointly established by the Xuzhou Municipal Finance Bureau and a fund manager subsidiary of Guosheng Group. The fund, with its focus on six strategic emerging industries in Xuzhou, received a total subscription of CNY4.5 billion.

 

In February 2021, Jiangsu province and the Xuzhou government also established the Huaihai Economic Zone Investment Fund. This is the first intra-provincial but cross-regional cooperative development fund in China, creating a new model for government investment funds to support regional collaborative development.

 

Xuzhou GGF has also shown an eye-opening grade report in recent years. To learn more about Xuzhou GGF, you can read FOF Weekly’s previous article.

 

To Sum Up

 

With all this development, Jiangsu province is transforming the Yangtze River Delta, taking the lead in connecting industrial chains and rapidly advancing the domestic hyper-cycle. By launching GGFs across the province, it is invigorating the local PE/VC industry.

 

Hefei has recently gone viral on the internet for its adventurous venture investment style, and now there is Jiangsu, delivering the fruits of investment across the province.

 

Generally speaking, raising private capital has been increasingly challenging, thus these government-led funds are turned to more often nowadays in China. Thanks to its strong GGFs and PE funds, Jiangsu has seen its semiconductor and biomedicine industry gradually develop and expand.

 

What will be next? Jiangsu has the answer.