Investments

$15B Chinese Fund To Invest In Tech Firms, Compete With SoftBank

China Merchants Group has partnered with London-based firm Centricus to launch a $15 billion technology investment fund to compete with the Vision Fund created by Japan’s SoftBank.

According to the Financial Times, the state-owned conglomerate, along with other Chinese groups, has pledged to invest up to Rmb40bn of the “China New Era Technology Fund.”

The fund will also consider deals outside of China, which could cause problems with Western governments who have recently become concerned about Chinese dealmaking in their technology sectors.

Just last month, Treasury Secretary Steve Mnuchin stated that investment controls are needed with the aim of protecting U.S. technology interests. And it was reported that the Treasury Department is gearing up to announce rules that would prevent companies with 25 percent or more Chinese ownership from purchasing a U.S. company that has “industrially significant technology.”

“We have the greatest technology in the world,” said President Donald Trump on June 26. “People copy it, and they steal it. But we have the great scientists, we have the great brains and we have to protect that, and we’re going to protect it and that’s what we’re doing. And that can be done through CFIUS. We have a lot of things we can do it through and we’re working that out.”

Centricus is the investment firm that helped structure SoftBank’s record-setting technology fund. The company is led by former Deutsche Bank employees Nizar Al-Bassam and Dalinc Ariburnu, who helped SoftBank secure $60 billion in commitments from the state funds of Saudi Arabia and Abu Dhabi.

Along with Beijing-based SPF Group, Centricus will be responsible for raising the remaining Rmb60bn for the fund from governments, universities and other technology companies.

An affiliate of CMG and a new joint venture formed between Centricus and SPF Group will manage the fund.

“The technology revolution is taking place much faster than expected and this is creating a big race for investments in this space. We are at a stage where the size of available funds and the ability to access big markets will be the game-changer,” said Ariburnu.

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