China-Focused Venture Capital Funds on the Road - April 2012

by Yong Xiang Pua

  • 13 Apr 2012
  • PE

Interests in venture capital opportunities within China remain high after 49 venture capital funds focused on investing in the country raised an aggregate $11.3bn last year. At present there are another 46 venture vehicles currently on the road seeking capital from investors. These funds, which include both generalist and stage-specific vehicles, are targeting a pool of $10.2bn in LP commitments. Seventeen of these vehicles have already held interim closes, raising an aggregate $1bn towards their final totals.

Sixty percent of the aggregate capital target is being raised by fund managers based in Asia, while the remaining 40% is being sought by fund managers based outside of the region. The largest venture capital fund being raised to invest in China is managed by US-based Lightspeed Venture Partners. Lightspeed China Fund I is the firm’s first vehicle to focus on venture opportunities within China and aims to raise $800mn from investors. The next largest vehicle on the road is YR Delta Investment Management’s YR Delta Fund I. Targeting CNY 5bn ($772mn) from investors, the first-time fund aims to allocate at least 80% of its capital to expansion/late stage companies and at most 20% to early stage firms based in china. Inclusive of YR Delta Investment Management, there are 10 first-time fund managers seeking 33% of the targeted capital collectively.

Fund managers that traditionally adopt other private equity strategies have also entered the venture capital fundraising scene. One such GP is Hong Kong’s established buyout fund manager CITIC Capital, which has recently held a successful $60mn first close for its first venture vehicle. CITIC Capital Venture Partners is targeting $150mn in total and focuses on fast growing SMEs in clean technology, consumer, IT, and other emerging markets.

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