Guangzhou government commits $29bn to fund-of-funds
The Guangzhou provincial government has established two fund-of-funds (FoFs) with a combined scale of CNY 200bn (USD 29bn).
The two vehicles are Guangzhou Industry FoF and Guangzhou Venture Capital FoF, which will receive CNY 150bn and CNY 50bn, respectively. Both funds will be established in Nansha.
The Industry FoF will make commitments to third-party funds and participate in direct investments. The objective is to attract mature companies and industry leaders to Nansha with a view to building an industry cluster worth more than CNY 600bn.
The main focus areas are semiconductors and integrated circuits, new energy, biotech and healthcare, advanced manufacturing, next-generation IT, and new retail.
The Venture Capital FoF is intended to support the development of a cluster of VC funds with more than CNY 200bn in assets under management, serving Guangzhou's science and technology innovation strategy. There will be sub-funds targeting angel and seed investment and a dedicated vehicle focused on attracting top research talent.
It is claimed the two fund-of-funds will be different from most government guidance funds in that they will operate in a more market-oriented way.
Government guidance funds typically have a "return investment" ratio. For every CNY 1 that portfolio managers receive from the government, CNY 1.50 is expected to be invested in local enterprises. One way to achieve that is by getting companies to establish branches or manufacturing bases in the target city.
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