150 Million USD in funding for China tech , from Investcorp

Investcorp, a Bahrain-listed asset manager, will invest in a Chinese state-backed fund with holdings in some of the mainland’s fastest-growing technology companies, joining a raft of global investors seeking to capitalise on the prospects for the sector in Asia.

The investment group has agreed to pour as much as 150 million USD into the China Everbright Limited New Economy Fund, which is managed by China Everbright, a Hong Kong-listed financial conglomerate that is controlled by the Chinese state.

Investcorp, which is investing in China for the first time since the group was set up in 1982, could add an extra 100 million USD of co-investment in the future in a portfolio of companies that includes Chinese artificial intelligence developer SenseTime and video streaming service iQiyi.

The decision to invest in China is partly “in recognition of the country having the world’s highest number of internet users and being home to some of the fastest growing ‘unicorn’ technology companies valued at over 1 billion USD”, Investcorp said in a statement to the Financial Times.

The Everbright fund has already received an aggregate commitment of 313 million USD from other investors, and has made investments including Wish, a large, unlisted mobile ecommerce platform, and Yixia Technology, a short-form mobile video-sharing platform.

China has experienced a flurry of pre-initial public offering fundraising this year, with several large tech groups raising billions of dollars at high valuations. Ant Financial, the payments arm of Alibaba, for example, raised 10 billion USD at a valuation of 150 billion USD.

Investors from around the world have piled into these groups, drawn by the prospect of cashing out in an expected wave of upcoming IPOs. However, many of China’s recent technology and consumer listings, such as ecommerce group Pinduoduo and electric carmaker Nio, have underperformed investor expectations.

In May, SenseTime, one of China’s top AI start-ups, launched its second funding round in just two months, bringing in 1.2 billion USD for the year and valuing the company at 4.5 billion USD.

Investors in the Beijing-based group, whose facial recognition software is used by Chinese police, include Alibaba, Fidelity International, Hopu Capital, Silver Lake, Tiger Global, Singapore’s state investment fund Temasek and Qualcomm.

Baidu-backed iQiyi, which has been compared with US video streaming company Netflix, filed for an IPO in the US this year and was valued by analysts at 15 billion USD.

The Everbright fund is one of a number of investment vehicles launched this year to focus on technology in China. State-owned China Merchants Group launched the RMB 100 billion (15 billion USD) China New Era Technology Fund, aimed at investing in technology, similar to SoftBank’s 100 billion USD Vision Fund.

China Everbright is a sprawling state-owned conglomerate whose holdings span banks, asset management and aircraft leasing, among others. In 2016 it bought a 65% equity stake in Italian-owned media rights company MP & Silva.