China is transforming from being, the world factory to the world’s financial center
China’s equity investment scene is undergoing dramatic transformation. RMB-denominated funds are getting more attention than their USD peers. More and more funds are targeting domestic listing, surpassing the interests in overseas listing. Even during the financial crisis, the number of IPOs in China was double that in the United States; the amount of capital raised reached a record breaking USD 52bn. With the support of the VC/PE industry in China, more emerging industries have resources to focus on R&D. At the same time, VC/PE funds in China have begun to pay attention to regions outside of Beijing and Shanghai.
Capital is flowing to regions outside of Beijing and Shanghai
China’s investment firms have started to pay attention to cities other than Beijing and Shanghai. Now, China’s investment community calls Beijing, Shanghai and Hong Kong the “saturated markets”. In order to support companies in less developed region, more and more VC/PE firms are cooperating with local governments.
Headquartered at Shanghai, SMC Capital China (SMC3) recently announced its ‘Vision 8|8’ plan. The plan is to become the most ‘Chinese’ of the international growth capital firms in China, focusing on world-class best practices with full localization via both USD and RMB funds. By 2015, we aim to manage over RMB8 billion with local offices, teams and strategic partners in at least 8 Chinese cities.
SMC3 is already seeing signs of early successes, having closed a USD “Mother Fund” and three joint venture RMB funds with local partners in Wuxi and Dalian in the past ten months. The firm has partnered with the Wuxi government and Wuxi’s Guolian Group to form two funds with a local team and office. SMC3 also established a Dalian fund with the local government and partners, a Dalian team and office. It has doubled the size of the China investment team to sixteen professionals across offices in Shanghai, Hong Kong, Wuxi and Dalian.
“From 2006-2009, Dalian’s GDP growth rate is around 14%.” Says San Eng, SMC3’s partner, “with a population of 6 million people and great resources in the northeast China, Dalian has unlimited potential. Now, SMC’s focus has transferred from the saturated market in Beijing and Shanghai to undiscovered “gems” such as Dalian.”
Investment focus now on solar to LED, to waste water treatment, SNS players
In 2010, 84 investments were in the cleantech sector, raising more than USD 577m in capital; the investment spotlight has shifted from solar/wind to LED, water and solid waste treatment and other industries.
SMC3 partner San Eng (middle)
SMC3 partner San Eng told the reporter, “The water shortage problem in China is getting more severe; we are partnering with Wuxi government to invest in wastewater treatment companies. At the same time, we are working with Dalian government to explore the solid waste treatment and recycling industry.”
For full details, please click here for original article in Korean.