SHANGHAI: SVB Financial Group, the parent company of California-based Silicon Valley Bank, made its debut in the Chinese market by opening its third international subsidiary in Shanghai yesterday.

The new company, named as SVB Business Partners (Shanghai) Co Ltd, mainly targets high-growth technology companies and venture capital investors.

The Shanghai office will primarily serve SVB's US-based clients that are doing business in China, and also help Chinese companies enter the US market. It will introduce its clients to Silicon Valley Bank, but will not provide lending, deposit or investment advisory services itself.

Tapping into the Chinese market is part of SVB's global strategy to strengthen its presence in Asia. SVB Business Partners (Shanghai) is the group's third international subsidiary after it set up offices in London and India's Bangalore last year.

"China is taking on an important position on the world stage as a growing technology and venture capital hub," said Ken Wilcox, president and CEO of SVB Financial Group and Silicon Valley Bank. "As a financial services company in the technology industry, if we were not global, we would be irrelevant."

"In addition, our presence in China will help strengthen venture capital relationships in China and the US and serve as an educational and networking hub for local entrepreneurs and investors," Wilcox added.

Wilcox decided to move permanently into China after SVB led a business delegation of 25 Silicon Valley and Boston-based venture capitalists (VCs) to China last June.

"I think VCs in the US clearly see the market opportunities here, given the size of the market and maturity of the management teams (of Chinese companies)," Harry Kellogg, vice-chairman and president of SVB's merchant banking group, told China Daily.

The US venture capital delegates have shown great interest in the telecom industry, semiconductor and Internet sectors.

Kellogg said he expected that wireless services would be hotly pursued given the growth rates in the sector. Currently, investment is being made in China both directly and indirectly.

On an indirect basis, about 10-25 per cent of the companies invested in by the venture capital delegates have research and development teams located in China and are outsourcing manufacturing, or have significant revenue coming from China.

On a direct basis, more notable investments include those made by companies like Semiconductor Manufacturing International Corporation (SMIC), CSMC Technologies Corporation and Ctrip.com.

SMIC is listed on both the New York and Hong Kong exchanges, and Ctrip.com is listed on the NASDAQ.

China's VC industry has finally matured after more than a decade of development. Foreign and domestic venture capital firms have invested in about 3,000 companies in China so far.

Attracted by high economic growth and encouraged by a number of successful investments, an increasing number of venture investors in recent years, particularly foreign ones, have been thinking about China investment strategies.

There have already been more than 100 venture-backed initial public offerings (IPOs) and mergers and acquisitions (M&A) in China. Most of these have been overseas IPOs and cross-border M&A.

These transactions primarily took place in the telecoms and Internet industries. Internet-related companies offered the best returns to their VC investors, according to a report by Zero2IPO, a market research company.

(China Daily 12/09/2005 page11)