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CDC to launch high tech venture fund with Nanhai government in China

CDC (NASDAQ:CHIND), a China-based growth investor in hybrid enterprise software, is to launch an approximate US$90 million private equity fund with the government of Nanhai District in Foshan, China, to invest in early-stage high tech companies in the area.

Foshan is the third largest city in Guangdong province, China and holds one of the highest gross domestic product (GDP) per capita in the country, considered one of the top-10 fastest growing cities in the region.

The venture fund, to be called the Foshan Nanhai-CDC Technology and New Media Fund, is expected to focus on investments in Nanhai’s high tech and new media industries, including cloud computing, e-commerce, social network websites, 3G mobile media, internet media as well as content and animation.

CDC anticipates that the vehicle will consist of investments in start-up and growth technology companies, as well as U.S. technology and new media companies.

The idea is to introduce overseas high-tech industrialization projects and talent, which will help propel the growth of emerging companies in the region, said the company.

“Nanhai will make a significant effort to develop its high-tech industries. The district government will earmark the best sites, near metro transit lines in the region to build high-tech parks and to provide certain incentives to attract science and technology professionals to this region,” said mayor of Nanhai District, Ou Bangmin.

CDC also expects to use its global business and technology platform to help its investments in the fund grow.

“For example, as the fund assimilates intellectual property from different geographic regions worldwide, it can migrate operations to CDC’s R&D facilities in China and leverage the resulting benefits in the form of costs savings, increased competitiveness, and higher profitability,” said CEO of CDC Peter Yip.

An investment and advisory committee will be formed, to be led by Yip and chairman of CDC Raymond Ch'ien, respectively.

The establishment of the fund is subject to several customary conditions, including the approval of CDC`s board.

CDC manages majority interests in its core portfolio of hybrid enterprise software, IT services and new media businesses. It also co-invests with venture capital and private equity funds through minority interests in growing companies in emerging markets related to CDC’s core assets.

Disclosure: no position