(Adds limited partners, sectors and background)
By George Chen
SHANGHAI Nov 10 SB China Venture Capital, backed
by Japan's Softbank Corp (9984.T), is raising its first
yuan-denominated investment fund with an initial target size of
up to 2 billion yuan ($293 million), people with direct knowledge
of the matter said on Monday.
SB China aims to complete the fund-raising before the end of
this year or early next year and it will cooperate with an
investment arm of the Shanghai city government to launch the
fund, said the sources, who declined to be identified before an
official announcement is made to the public.
The fund, to be managed by SB China as its general partner,
will focus on the fast-growing high-technology sectors in China,
especially in Shanghai's Pudong New Area, they said.
SB China expects to attract capital from Chinese limited
partners in eastern China, in particular Shanghai, Zhejiang and
Jiangsu where the private economy is strong and growing rapidly.
"Yes, the market environment is tough, but demand for
investments and wealth management services from these rich
private entrepreneurs in China remains strong," said one of the
"Ideally, it would be great to raise 2 billion yuan but it
would also be good to get a number like 1.5 billion yuan in the
end," he added.
Shanghai Pudong Science and Technology Investment Co Ltd, a
city government-owned investment agency founded in 1999, is
expected to become a major limited partner of the fund, the
sources said, adding that no final agreement had been reached.
FOCUS ON HIGH-TECH
In 1990, Shanghai got the blessing of China's paramount
leader Deng Xiaoping to transform Pudong, a backward rural
district opposite the city, into Asia's future financial centre,
that would one day surpass Hong Kong.
Pudong, formerly a marshland where Shanghai's vegetables were
grown, was once described by visiting Nobel Laureate Milton
Friedman as a huge white elephant, much to the embarassment of
his Chinese hosts.
To turn Pudong into a showcase for the world, the Shanghai
government's priorities are to develop the Lujiazui financial
district, often dubbed as China's emerging Wall Street, and
Zhangjiang Hi-tech Park, China's so-called Silicon Valley.
"To cooperate with Pudong New Area will be a shortcut for
Softbank to tap the ample resources of high-tech companies based
in Zhangjiang," said another of the sources.
The first yuan fund of SB China will not only invest in
high-tech sectors but also look for investment opportunities in
China's growth-stage companies in new energy, new material and
manufacturing sectors, the sources said.
SB China, founded in 2000, has made a number of landmark
deals, focusing on technology, media and telecom sectors. Its
portfolio includes many market leaders such as Alibaba.com Ltd
1688.HK, China's top e-commerce firm, and Focus Media Holding
Ltd FMCN.O, China's top digital advertising firm.
(Editing by Jacqueline Wong)