The Beijing Technological Development Area (BDA), also known as Beijing E-Town, has developed an industrial fund system, which is expected to scale up to more than 10 billion yuan ($1.6 billion) and help high-tech industries that focus on innovation.
The fund system, led by E-town Capital, features a parent fund consisting of 8 branches, including the Aerospace Industry Investment, Botai Fangde Bio-medical Investment, and Zhongguancun Modern Service Sector Venture Capital. Officials said that the number of branches is expected to rise to 16 in the future, which would collectively involve more than 10 billion yuan.
The funding system is divided into three main funds: a trust and guidance fund, participation and commingled fund, and a fund for leading industry.
Trust and guidance fund
The Zhongguancun Modern Service Sector Venture Capital started with an initial capital pool of 150 billion yuan from the Beijing government in October 2013, which has since quadrupled to 450 million yuan. Within the VC Company are three branches, which support three different industries in telecommunication such as, the Media and Technology industry (TMT industry), the energy conservation and environmental protection industry, and the high-tech service industry.
The TMT fund is a joint effort with Beijing Tianyun Ronghui Business Management Co., and is a stock fund of China Broadband Capital, which houses a wealth of experience behind its investment philosophy. A Limited Partnership Agreement (LPA) has been signed for the fund, and is now enlarging its capital pool.
The Energy Conservation and Environmental Protection fund is a joint effort with Beijing Zhongguancun Yunnengtai Investment and Management, a subsidiary of Zhongguancun International Environmental Industry Promotion Center. The fund has overseen significant achievements in recent years and is currently in the process of signing a LPA.
The High-tech Service Industry fund is a joint effort with Qingdao Amphora Capital Co., a famous investment institute in Qingdao. The fund helps the E-town attract capital outside of Beijing and is also in the process of signing a LPA.
Participation and commingled fund
E-town Capital has partially opened up to the market since 2010, in order to its fund operation. Only three funds have fully entered the market at present, which include the Aerospace Industry Investment fund, Zhongguancun Venture Capital for Scientific and Technological Industry, and E-town Venture Capital for Cloud Computing. They are contributed by limited partners and now have a total fund pool of over 7 billion yuan.
The Aerospace Industry Investment fund, founded in January 2010, was the first insurance fund to participate in private equity. It involves a total of four billion yuan, including one billion yuan from E-town Capital. The fund has so far carried out capital aid to 12 projects in the Aerospace industry.
Zhongguancun Venture Capital for Scientific and Technological Industry, founded in April 2012, maintains a goal of boosting the E-town development through overall fiscal planning. It comprises of three billion yuan, including 900 million from the E-town Capital.
E-town Venture Capital for Cloud Computing was established in June 2012, primarily aimed at upgrading industries in the BDA. It involves a total of 350 million yuan, including 100 million from the E-town Capital. The fund is now investing in seven projects in the cloud computing industry.
Fund for leading industry
E-town Capital set up as a fund management company in 2013 to explore better capital service options for the E-town. At the moment, there are two partnership funds comprising of E-town Fund for Strategic Emerging Industry and E-town Fund for Bio-pharmaceuticals; they involve a total of three billion yuan.
E-town Fund for Strategic Emerging Industry aims to be the parent fund by developing additional branches and directing the overall planning of fiscal and social funds to support the Semiconductor Manufacturing International Corp. The fund involves an initial money pool of three billion.
The E-town Fund for Bio-pharmaceuticals will draw its resources from Guotai Junan Securities, E-town Capital and the E-town Biomedical Park. It will introduce social capital to boost the development of the bioengineering and pharmaceutical industries in the area. At present, the fund is expected to involve approximately 500 million yuan.
Six more funds are ready to be launched.
As a parent fund, E-town Capital will build an investment platform and use government-led and industry-supported funds in the next five years. It is hoped this will boost industrial development and foster new businesses, as well as improve financial ecology in the area.
Government-led fund
Guidance capital for science and technology finance development will be funded by the E-town administration and is run by the E-town Capital. It will invest mainly in the high-tech sector through stock shares and bonds. The fund will consist of two sub-funds, one for the commercialization of research findings and another for high-tech enterprise development and investment.
It is expected that the E-town government and the Beijing E-town International Investment and Development Co. will jointly establish entrepreneurship capital for human resources. The first phase will involve 500 million yuan, including 100 million from the government. The fund will operate on both direct investment and private equity, and the area’s administration will allocate a special fund to invest in human resources and business projects.
Industry-supported fund
The major funds for the integrated circuit industry include: a national investment fund for integrated circuitry, Beijing private equity for integrated circuitry, Beijing E-town IC investment and M&A fund, and Semiconductor and Internet fund. They focus on chips for mobile communication, storage, IGBT, power electronics control, CPU and MEMS, as well as support for other companies in the industrial chain.
The Infrastructure Capital Group comprises mainly of the new aviation city development fund, the Beijing Urban Construction Investment Development fund, and E-town infrastructure fund. The new aviation city fund will be jointly built by insurance, loan and trust, security and investment companies, and sponsored by E-town Capital and the Beijing Economic-technological Investment and Development Corporation. It plans to involve 1.5 billion yuan and set up equity investment and engineering construction, as well as industrial development funds that focus on airport industrial chain investment, construction of the Beijing Daxing International Airport and the new aviation city's infrastructure and industrial parks. The other two funds - the Beijing Urban Construction Investment Development and E-town infrastructure - will be jointly established by the Beijing Urban Construction Investment Development Co and E-town Capital, and involve an initial fund of five billion yuan. It plans to invest in medium to large infrastructure projects.
Guotai Junan Capital, E-town Capital and Beijing Yizhuang Biomedical Park will jointly establish E-town capital for bio-pharmaceuticals and will involve approximately 500 million yuan during the first phase. It will invest in the medical and health care industries, as well as the seven other national strategic emerging industries. The fund prioritizes investment for strategic emerging industry.
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