A RMB 1 billion dual-GP fund based in Sichuan and Shanghai has been launched.

State-owned capitals from both regions contribute capital, and investment institutions from both regions are included in the GP list. This makes the Shanghai-Sichuan Fund significantly different from the previously common cross-regional funds established with state-owned capital contributions.

A 1-billion-yuan venture capital fund has linked the Shanghai municipal state-owned capital with the provincial and municipal state-owned capitals of Sichuan Province.

Reporters from Science and Technology Innovation Board Daily noted that Huchuan (Sichuan) Eastern-Western Collaborative Innovation and Entrepreneurship Investment Fund Partnership (Limited Partnership) has completed industrial and commercial registration, with a total size of 1 billion yuan.

In terms of the capital contribution structure, Sichuan Revitalization Investment and Ziyang Industry Investment subscribe 400 million yuan respectively, each accounting for 40% of the fund size; Shanghai Venture Capital subscribes 187.5 million yuan, accounting for 18.75%. The three state-owned platforms subscribe a total of 987.5 million yuan, accounting for 98.75% of the fund size.

It is reported that Sichuan Revitalization Investment is a wholly-owned subsidiary under Sichuan Industrial Revitalization Fund Investment Group, Ziyang Industry Investment is wholly owned by the State-owned Assets Supervision and Administration Commission of Ziyang City, and Shanghai Venture Capital is affiliated to Shanghai Science and Technology Venture Capital (Group) Co., Ltd. That is to say, the Sichuan provincial and Ziyang municipal state-owned capitals jointly bear 80% of the subscribed capital contribution of the fund, while Shanghai state-owned capital only accounts for 20%.

On the fund management side, Shanghai Zhongxin Ceyuan Private Equity Fund Management Co., Ltd. and Chengdu Silk Road Restructuring Equity Investment Fund Management Co., Ltd. serve as GPs at the same time.

State-owned capitals from both regions contribute capital, and investment institutions from both regions are included in the GP list. This makes the Shanghai-Sichuan Fund significantly different from the previously common cross-regional funds established with state-owned capital contributions.

Data from CLS Venture Capital Connect — Zhizhong shows that as of now, there have been 521 cases of cross-regional state-owned capital contributions, accounting for 19.26% of the total number of state-owned capital contributions. Reporters from Science and Technology Innovation Board Daily sorted out and found that the common situation is that market-oriented investment institutions initiate funds and absorb state-owned capitals from various regions as LPs respectively.

Semiconductor investment institution Yuanhe Puhua is a typical example. Its Shanghai Yuanhe Puhua Fund has a first close size of 775 million yuan, with a target size of 2 billion yuan. Among the first close investors, Shanghai Guotou Pilot Integrated Circuit Fund subscribes 155 million yuan, and Shanghai Zhangjiang related investment entities subscribe 100 million yuan. Later, Zhuzhou Guotou Venture Capital invested another 50 million yuan.

Another Shanghai Zhiwei Lingfeng Venture Capital Fund has a subscribed size of 3.2 billion yuan, which also gathers capital from multiple regions. According to the information disclosed by Advanced Micro-Fabrication Equipment Inc. China, in addition to the local Shanghai state-owned capital, Nanchang Industrial Investment Group and Chongqing Bishan Science and Technology Innovation Industrial Fund subscribe 100 million yuan respectively. In addition, investment entities from Dongguan, Wuhu, Nantong, Hefei and other places also appear in the list of investors.

A person from a market-oriented investment institution that has long cooperated with local state-owned capitals told the reporter of Science and Technology Innovation Board Daily that some regions have relatively limited high-quality projects available for local investment and introduction. Local state-owned capitals participating in out-of-town funds, in addition to considering financial returns, also hope to use the project reserves and industrial resources of investment institutions to find opportunities for local investment attraction.

According to his observation, state-owned LPs from different regions may respectively focus on enterprise settlement, R&D institution establishment and cooperation with local industrial chains. For market-oriented GPs, how to coordinate between fund investment and the industrial demands of LPs in various regions is also a problem that needs to be considered in actual operation.

The above-mentioned person also mentioned, some regions have adjusted the identification of return investment and industrial contribution. Enterprises do not necessarily need to move into the local area as a whole. Establishing R&D institutions or carrying out supply chain cooperation may also be included in the industrial contribution assessment, which makes local state-owned capitals more motivated to contribute to out-of-town funds.

Apart from these funds initiated by market-oriented institutions, local state-owned capitals have begun to take the lead in organizing cross-regional capital cooperation directly.

In July this year, the Shenzhen municipal state-owned capital took the lead in setting up an industrial fund with a scale of 100 billion yuan, with state-owned capitals from Foshan and Ningbo participating in the contribution together.

Different from funds such as Yuanhe Puhua, the leading party of this Shenzhen fund is the local state-owned capital itself. The funds from Foshan and Ningbo no longer only gather with funds from other regions through a market-oriented institution, but directly participate in the industrial fund led by Shenzhen state-owned capital.

Looking at the Shanghai-Sichuan Fund, the reporter of Science and Technology Innovation Board Daily found that the connection between the state-owned capitals of the two regions is far earlier than the industrial and commercial registration of this fund.

In April this year, Sichuan Development (Holdings) Co., Ltd. and Shanghai Science and Technology Innovation Group signed a strategic cooperation agreement in Shanghai. According to the information disclosed at that time, the two sides clarified that they are priority investment partners for each other, and carry out joint investment and industrial mergers and acquisitions around aerospace, biomedicine, artificial intelligence, integrated circuits and other fields. On the day of the signing, 22 science and technology innovation enterprises from Shanghai and Sichuan also participated in the project roadshow and promotion.

Two months later, the cooperation further extended to Ziyang. On June 27, the Ziyang Municipal Government, Sichuan Industrial Fund and Shanghai Science and Technology Innovation Group signed a cooperation agreement, proposing to jointly launch an industrial fund with a total size of 3 billion yuan, focusing on aerospace industry, green energy, biopharmaceutical and medical devices, artificial intelligence and other fields. On the same day, 14 units from Shanghai and Sichuan also jointly launched the Eastern-Western Science and Technology Innovation Industry Alliance.

In fact, before the establishment of the fund, the capitals of the two regions have carried out cooperation on specific projects. In April this year, Chengdu-based company Nuraite Medical obtained a 1-billion-yuan investment participated by institutions including Shanghai Science and Technology Innovation Group and Sichuan Venture Capital under Sichuan Industrial Fund, and set up an R&D company in Shanghai, planning to build a local industrialization platform.

From this point of view, the joint investment direction was clarified in April, the joint launch of the industrial fund was proposed in June, and now the Sichuan provincial and municipal state-owned capitals and Shanghai municipal state-owned capital jointly subscribe 1 billion yuan, the cooperation between the two sides is deepening step by step.

From jointly investing in the fund of one institution to different regions' state-owned capitals directly joining hands to set up funds, the focus of cross-regional cooperation of local state-owned capitals is extending from how to invest the capital out to how to connect industrial resources.

This article is from the WeChat Official Account "Science and Technology Innovation Board Daily", Author: Yu Shiqi, released with authorization from 36Kr.