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CDC to launch private equity RMB fund with China government

CDC, a China-based operator of and growth investor in hybrid enterprise software, IT services, and new media assets, has signed a memorandum of understanding to establish a private equity fund with the government of Nanhai District, Foshan, a city located in south China’s Guangdong Province.

The Foshan Nanhai-CDC Technology and New Media Fund will be initially funded at RMB600m.

Foshan is the third largest city in Guangdong and holds one of the highest gross domestic product per capita in the country. Foshan is considered one of the top-ten fastest growing cities in China, and has a large manufacturing sector, including companies that design and manufacture electrical appliances, textiles, garments and ceramics products.

The memorandum was signed by Peter Yip, chief executive of CDC, and Wan Zhikang, vice mayor of the People’s Government of Nanhai District, Foshan City, in a ceremony held on 9 September.

The establishment of the fund is subject to the completion of several customary conditions, including the receipt of approval by the CDC board of directors, the completion and execution of legal documentation and the receipt of all required approvals.

According to the agreement, the venture fund will focus on Nanhai’s high tech and new media industries, including cloud computing, e-commerce, social network websites, 3G mobile media, internet media and content and animation.

The fund is expected to mainly consist of investments in start-up and growth technology companies, as well as US technology and new media companies.

Through the fund, CDC and the government plan to introduce overseas high-tech industrialisation projects and talent recruitment to help propel the growth of emerging companies in the region.

The fund will be under the guidance of an investment committee led by Yip and an advisory committee headed by Raymond Ch’ien, chairman of the board of directors of CDC and chairman of the boards of MTR and Hang Seng Bank.

Ou Bangmin, mayor of the People’s Government of Nanhai District, Foshan City, says: "Nanhai will make a significant effort to develop its high-tech industries. The district government will earmark the best sites, near metro transit lines in the region to build high-tech parks and to provide certain incentives to attract science and technology professionals to this region. The district government expects CDC to help us realise the technology-led economic transformation vision for this area."

"We are very excited to add this new media and technology fund to CDC Corporation’s investment assets," says Yip. "This fund also is in line with CDC’s investment strategy of bringing our operational expertise to assets we invest in, as well as helping our investments achieve economies of scale by leveraging our global business and technology platform that includes a worldwide network of sales, marketing, support and general administrative operations, as well as extensive research and development centers in China. For example, as the fund assimilates intellectual property from different geographic regions worldwide, it can migrate operations to CDC’s R&D facilities in China and leverage the resulting benefits in the form of costs savings, increased competitiveness, and higher profitability."

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