China Lures Two New VC Funds

BEIJING – Two new China-focused venture capital funds are being raised, PE Week has learned.

One is an unannounced second fund of $50 million being raised by SZVC-UOB Venture Management Co. The other is a $100 million fund announced late last week in Hong Kong, at the Asian Venture Forum, by Shenzen Capital Group (SCGC), parent company to SZVC, and AsiaTech Industry Group, of the United States.

In an exclusive interview, Yew Seng Lim, general manager of Shenzhen, China-based SZVC, said that his firm has closed on a $10 million commitment for his firm’s second fund, SZVC II, from a Taiwanese investor. He said additional funding from U.S.-based limited partners will be announced in the near future. SZVC, while an independent entity, is itself a joint venture set up by the Shenzen Capital Group (SCGC) and the United Overseas Bank (UOB), one of the four largest public banks in Singapore.

SZVC focuses on investments in Chinese growth stage companies within technology and service sectors. The parent company of SCGC, which was formed by the Shenzen municipal government, is Mainland China’s largest venture capital fund, with $200 million of capital and at least 80 portfolio companies under management.

To date SCGC has established nine separate venture capital funds in China, three as joint ventures, including SZVC. Lim says that SCGC is using joint venture funds such as his to evolve into U.S. and foreign domiciled funds.

The first fully foreign domiciled fund, the China Dragon Fund, was announced last week in Hong Kong. It’s a joint venture of SCGC and Asia-Tech, a U.S. based group of investors. As of press time, no information was available on AsiaTech, its limited partners or other capital sources before the fund’s announcement.

However, according to Lim, China Dragon Fund will mainly invest in late stages of Chinese companies across several industry sectors, including, but not limited to, technology and services. And while China Dragon Fund, like SZVC, will have its firm management offices in Shenzen, it will be a Caymans Islands-domiciled firm.

Asked if there was an intent in the Caymans domicile in seeing the fund launching an IPO, Lim had no comment.