Yang Yunfei

1017800664@qq.com

SHENZHEN is publicly seeking fund management institutions to run the city’s newly launched five industrial funds, according to recent government announcements.

The city’s finance bureau announced last week that Shenzhen is officially selecting fund managers for the five special funds worth 8.50 billion yuan (US$1.18 billion), the second batch of a series of industry supporting funds which are deemed key to the development of the city’s industries of the future.

The five funds were launched July 19 and focus on seven industries ranging from new materials, high-end equipment, digital creative equipment, brain science and artificial intelligence to cell and gene.

In June 2022, Shenzhen introduced the “20+8” industrial policy to cultivate and develop industries with huge growth potentials, in a bid to improve the city’s industrial landscape and help local manufacturers climb up the value chain.

According to the blueprint, the city will focus on fostering 20 strategic emerging industry sectors led by advanced manufacturing, and at the same time, strategically investing in eight emerging but promising industries.

In December last year, Shenzhen launched the first batch of funds dedicated to the “20+8” industrial initiative, covering four key industrial sectors: synthetic biology, intelligent sensors, new energy vehicles and biopharmaceuticals.

With a target fund size of 16.5 billion yuan, the first five funds have already been invested in industrial projects in Longgang, Pingshan and Guangming districts.

Shenzhen is expected to launch the third batch of “20+8” industrial funds in the coming months of the year to cover the entire “20+8” industrial sectors.

Officials said the second batch of funds will be operated in a market-oriented manner, with up to 70% raised from Shenzhen’s municipal and district governments and the rest invested by financial institutions such as venture capital firms.

According to official announcements, generous incentive mechanisms are adopted to run the new funds, with the management fees for general partners increasing by up to 50% and excess returns from the funds completely shared by the investors.

Compared with the first group of funds, fund managers are allowed to use more flexible investment methods to run the new industrial funds.

In addition to investing in unlisted companies, fund managers can participate in private placement offerings by listed firms by investing no more than 20% of their funds.

Announcements by the finance bureau show that requirements for fund managers to run different new industrial funds vary, ranging from registered capital, net assets, management qualifications, team composition, investment track records, industrial resources to service capabilities.

The new materials industrial fund, the largest in the second batch of funds at 3 billion yuan, has the highest requirement for fund managers’ historical investment performances.

Fund firms and the key members of their management teams (partners or general managers and above) are required to have invested in a minimum of 20 new materials industrial projects or have invested a total amount of at least 3 billion yuan in new materials industrial projects.

They are also required to have at least three successful investment cases in the new materials sector.