A strategic fund worth 51 billion yuan has been launched, focusing on early-stage, small-scale, long-term, and hard technology investments.

On October 29th, China National New Holdings Co., Ltd. (hereinafter referred to as "China National New") jointly with Xicheng District of Beijing held the release ceremony of the Special Fund for the Development of Strategic Emerging Industries of Central Enterprises (hereinafter referred to as the "Central Enterprise Strategic Emerging Industries Fund") in Beijing.

The first-phase fundraising of the Central Enterprise Strategic Emerging Industries Fund reached 51 billion yuan, with 15 investors. China National New was entrusted with the fundraising and management of the fund, contributing 15 billion yuan and holding 29.4% of the shares, making it the largest shareholder. In addition, 13 central enterprises and Xicheng District of Beijing jointly invested in the fund.

Among them, Xicheng District of Beijing contributed 10 billion yuan, China Mobile contributed 6 billion yuan, Sinopec contributed 5 billion yuan, CNOOC contributed 3 billion yuan, PetroChina contributed 2 billion yuan, China Telecom contributed 1.5 billion yuan, China Unicom contributed 1.5 billion yuan, CETC Investment contributed 1 billion yuan, China National Coal Group contributed 1 billion yuan, China Resources contributed 1 billion yuan, China Merchants Group contributed 1 billion yuan, Baowu Steel contributed 1 billion yuan, State Power Investment Corporation contributed 1 billion yuan, and China Logistics Group contributed 1 billion yuan.

The fund focuses on investing in strategic emerging industries such as artificial intelligence, high-end equipment, and quantum technology, as well as key areas of future industries such as future energy, future information, and future manufacturing. The total term of the fund is 15 years, including a 5-year investment period, an 8-year management and exit period, and an extendable period of 2 years.

Generally, the investment cycle of equity investment funds is about 7 to 8 years. A 15-year term is equivalent to doubling the investment cycle.

Li Zhen, a member of the Party Committee and Deputy Director of the State-owned Assets Supervision and Administration Commission of the State Council, said at the release ceremony that accelerating the development of strategic emerging industries is a mission entrusted to central enterprises by the Party Central Committee. Establishing the Central Enterprise Strategic Emerging Industries Fund is a crucial step in supporting the development of strategic emerging industries of central enterprises. He emphasized that "the fund should adhere to new positioning, new approaches, new teams, and new mechanisms, focus on empowering new productive forces, and serve the development of strategic emerging industries of central enterprises. It should promote the capital chain to better serve the industrial chain and innovation chain, and contribute to the optimization of the layout and structural adjustment of the state-owned economy."

Since the beginning of this year, several central enterprise venture capital funds with a scale of over 10 billion yuan have been established. At a press conference held by the State Council Information Office in September this year, Yuan Ye, Deputy Director of the State-owned Assets Supervision and Administration Commission of the State Council, said that many central enterprises have established venture capital funds, with a total scale approaching 100 billion yuan. These funds focus on technological attributes, technological value, and emerging fields, and actively invest in early-stage, small-scale, long-term, and hard-tech projects, forming a new model of integration between industry and finance.

In May this year, Chengtong Science and Technology Innovation Investment Fund (Beijing) Partnership (Limited Partnership) was established. The planned total scale of the fund is 30 billion yuan, with the first-phase scale of 10 billion yuan. It was jointly established by China Chengtong, leading the way, together with Sinopec, China National Aviation Fuel, and the government of Haidian District, Beijing. The fund focuses on three core areas: new materials, advanced manufacturing, and new-generation information technology.

In July this year, China Chengtong signed a framework cooperation agreement with the People's Government of Jiangsu Province to jointly promote the establishment of the Chengtong Science and Technology Innovation (Jiangsu) Fund with a scale of 10 billion yuan, providing capital support for early- and mid-stage technology projects and industrialization.

In August this year, Guoxin Venture Capital Fund (Hangzhou) Partnership (Limited Partnership) was registered and established in Hangzhou, with a contribution of 10 billion yuan.

In December 2024, the State-owned Assets Supervision and Administration Commission of the State Council and the National Development and Reform Commission jointly issued policy measures to promote the high-quality development of central enterprise venture capital funds, supporting central enterprises to initiate the establishment of venture capital funds, with a focus on investing in early-stage, small-scale, long-term, and hard-tech projects.

Previously, the primary market was generally concerned about the "tolerance" of state-owned capital. The policy measures have proposed corresponding solutions.

The policy measures mention that in response to issues such as "fear of investing" and "reluctance to invest" in state-owned venture capital, a performance evaluation and due diligence compliance exemption mechanism in line with the characteristics of state-owned assets and central enterprises should be improved. A full-life cycle performance evaluation mechanism for venture capital funds focusing on their functional roles should be established. It is necessary to "calculate the overall account" by conducting long-term performance evaluation on the overall investment portfolio, and also "calculate the big picture" by evaluating with the functional role as the core, taking into account factors such as benefit returns, rather than simply pursuing financial returns as the goal.

Central enterprise venture capital funds should reasonably tolerate normal investment risks, determine the risk tolerance based on the investment strategy, and set a fault tolerance rate. Funds focusing on seed-stage and start-up projects can set a relatively high fault tolerance rate. In various supervision and inspections, more attention should be paid to the overall investment portfolio of the fund rather than individual projects, to the functional role and strategic value rather than short-term financial profits and losses, and to the long-term development trend rather than current phased problems.

In accordance with the requirements of "distinguishing between three types of situations", a due diligence compliance exemption mechanism should be established. For projects that conform to the functional positioning and investment strategy of the fund but result in investment failure, fail to meet expectations, or make exploratory mistakes, if the relevant personnel comply with laws and regulations, fulfill their fiduciary and due diligence obligations, and do not seek illegal benefits, they may be exempted from liability in accordance with regulations.

An investor focusing on the technology field told Caixin that hard-tech start-ups have often faced financing difficulties in the past. These start-ups typically feature high R & D investment and high labor costs, but slow commercialization progress. It is difficult for market-oriented funds to provide large amounts of investment to these companies. However, with policy support, state-owned capital can help these start-ups broaden their financing channels.

The investor also mentioned that state-owned capital can stimulate the investment enthusiasm of market-oriented funds. In some projects with large financing needs, state-owned capital can lead the investment, and market-oriented funds can follow.

Moreover, central enterprises themselves have rich application scenarios for cooperation. For example, in July this year, China Mobile placed a robot order worth about 120 million yuan. Zhipu AI won the bid for 78 million yuan (including tax), and Unitree Robotics won the bid for about 46 million yuan (including tax).

This article is from the WeChat official account "Semi-Ripe Finance" (ID: Banshu-Caijing), author: Liu Yiqin, published by 36Kr with authorization.