HONG KONG—The quest by Chinese firms to acquire global
technology is about to get a $5 billion boost.
Chinese venture-capital firm GSR Ventures is raising a $5
billion fund to buy overseas assets, according to people familiar
with the situation. The fund, which is expected to be announced
Monday, will target deals to acquire companies in technology,
Internet and biotechnology industries globally where the Chinese
market is key to growth prospects, they said.
GSR Ventures, a firm set up by Chinese tech entrepreneurs in
2004, raised its profile outside the country in March when it
joined U.S. venture-capital firm Oak Investment Partners in the
purchase of 80% of Philips NV's lighting components and
automotive-lighting operations in a $2.8 billion deal.
GSR Ventures' latest fundraising comes as Chinese firms,
encouraged by policy makers in Beijing, are pushing abroad to snap
up technologies that China imports. Many of these, such as
semiconductors and advanced automotive technology, are markets in
which China is the world's largest consumer of the end products,
for example mobile phones and cars.
In the most ambitious of those efforts so far, China's
state-owned Tsinghua Unigroup Ltd. made a $23 billion approach to
chip maker Micron Technology Inc. this month. Tsinghua Unigroup, an
arm of the country's top science university, faces hurdles in
bringing Micron to the negotiating table given the potential
scrutiny such a deal would bring from the U.S. government.
U.S. and European firms are also increasingly looking for
partners that can help their business in China, where sales have
suffered as the Chinese government favors local firms through
government procurement and discouraging the purchase of foreign
equipment. The urgency to build Chinese national champions in many
tech-related sectors was driven by revelations that the U.S.
government collected data and other information at home and abroad,
in some cases using infrastructure belonging to U.S. companies.
As a result, many U.S. firms are doing deals and sharing
technology with Chinese partners, hoping to maintain sales in the
Chinese market. For example, Hewlett-Packard Co. sold 51% of its
China networking-gear business to Tsinghua Unigroup for $2.3
billion in May. H-P hopes that the sale of a majority stake will
mean that operation, known as H3C, will be viewed as a domestic
company within China.
GSR Ventures' new $5 billion fund could be an attractive partner
in such deals given its team's experience navigating the local
Chinese tech scene. Companies often prefer to partner with
private-equity or venture-capital investors who have more
international experience and are more financially savvy than most
Chinese companies.
GSR Ventures made its name by investing in some of China's
hottest startups, including ride-hailing company Didi Kuaidi Joint
Co. and food delivery firm Ele.me. It was an early investor in
Didi, which is now a $15 billion company. GSR Ventures currently
manages over $1 billion in assets and has also made investments in
semiconductor companies, an electric vehicle battery maker and a
solar cell manufacturer. GSR Ventures operates offices in Beijing,
Hong Kong and Silicon Valley.
Write to Rick Carew at rick.carew@wsj.com
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