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French firm Ventech eyes more China deals

(Agencies)
Updated: 2009-04-10 15:34

French venture capital firm Ventech is ramping up investments in China and expects to close another three deals there by the end of this year on top of two already sealed, company executives said on Thursday.

Paris-based Ventech, with some 400 million euros ($531 million) under management, is a rare European face in the US-dominated wave of venture capital into China.

Ventech, which targets the information technology, digital media, life sciences and communication infrastructure sectors, set up a $130 million fund at the end of 2008 dedicated to China, the world's largest Internet market.

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The company invests at least half its funds overall in France and the rest mainly in western Europe.

"We think Chinese people are so dynamic, and want to work lots and succeed. There are a lot of opportunities," Hong Kong-based general partner Eric Huet said.

Ventech's highest profile deal in China was in 2007 when French online network Viadeo, in which Ventech had an investment, acquired Chinese counterpart Tianji.com.

US venture capital heavyweights such as Sequoia Capital, Steamboat Ventures and IDG have poured huge amounts into China's online video-sharing sector after Google's purchase of YouTube for $1.65 billion in 2006.

However, growth in the flow of venture capital into China slowed last year as funds grew more cautious as a result of the financial crisis.

In 2008, venture capital investment rose only about 30 percent to $4.21 billion, down from 83 percent growth in 2007, according to research firm Zero2IPO.

Hard to exit

Ventech is positive about the online payments sector in China, which is a mostly cash-based society, as well as mobile phone software applications, Huet said.

However, managing partner Jean Bourcereau said current market conditions means venture capital firms may need to wait longer before being able to exit their investments.

In the longer-term, Ventech is positioning itselfas a go-between for European companies hoping to develop their business in Asia, as well as Chinese companies seeking overseas acquisitions.

But the process for Chinese companies to buy foreign firms is always easy. US political concerns prevented Bain Capital and Huawei Technologies from obtaining US government permission to buy 3Com for $2.2 billion last year.

"There are a lot of opportunities to do cross-border business between Europe and China. But it's still early days," Bourcereau said.