China targets $7b security industry fund
China Reform Holdings, a state-owned fund manager with RMB700 billion ($100 billion) in assets under management, has launched a RMB50 billion fund that will make investments in the security industry, with a particular focus on technology-enabled services.
The Security Industry Development Investment Fund will be run in collaboration with China’s Ministry of Industry & Information Technology. A target of RMB20 billion has been set for the first phase of the fundraising. No details have been given as to initial commitments from LPs.
“The security industry has become a new driver of high-quality economic development. New technologies such as the internet of things, artificial intelligence and big data are deeply integrated with security equipment manufacturing. New products and services are deployed in the areas of production security, disaster prevention and mitigation, and emergency rescue,” said Zhijun Wang, the ministry's deputy minister.
He identified smart devices, cloud-based services, insurance, and financial leasing as key product development areas.
The fund launch follows the introduction of a national insurance compensation scheme for technical equipment. Under this scheme, both the manufacturer and the user of new technology-backed equipment can qualify for first deployment protection. The government will cover 80% of the annual premium.
Technology-driven manufacturing upgrades are a key policy area for the Chinese government and guidance funds have been rolled out in support of these efforts. Recent initiatives include the launch of a second advanced manufacturing investment fund, which is looking to raise RMB50 billion. Managed by the State Development & Investment Corporation (SDIC), it has backed companies such as battery maker Contemporary Amperex Technology and radiology player Shanghai United Imaging Healthcare.
Earlier this week, the Ministry of Finance has rallied state-owned enterprises (SOEs) and local governments to support a RMB147.2 billion ($20.9 billion) fund that will drive a transformation of the country's manufacturing sector. This fund is led by CRRC Corporation, the world’s largest supplier of rail transit equipment.
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