Change in foreign venture capital: the pursuit of RMB funds

Against the backdrop of uncertain global economic prospects, the battle for turning over Chinese concept stocks has become increasingly difficult, but this has not shaken the confidence of foreign venture capital firms in investing in China.

It is understood that most foreign-invested venture capitalists are still optimistic about China's investment opportunities, but they are forced to withdraw from overseas markets. They have begun to adjust their investment strategies in China: to slow down US dollar fund investment and expand RMB fund business.

In recent months, Chinese concept stocks have plunged frequently, and the overall valuation has fallen. The U.S. stock China 30 Index has fallen by nearly 40% in the past 6 months. Affected by this, the initial public offering (IPO) of Chinese companies in the United States has almost fallen into a freezing point. From the third quarter to the present, there is only one Chinese company in Tudou.com. "It is difficult to judge when the Chinese concept stocks will pick up." Bursting, the managing partner of McKay Boping Accounting, said that US investors still have concerns about the integrity of Chinese companies. In recent years, Chinese companies listed in the United States have frequently exposed integrity issues such as financial fraud. Although the US regulators have not deliberately raised the listing standards for Chinese companies, the US Public Company Accounting Supervision Committee has issued a warning. Auditors will treat companies from emerging market countries with caution.

Worries about Chinese concept stocks do not mean that foreign venture capitalists will abandon their investment in China. At present, foreign-invested venture capital institutions have shown unprecedented enthusiasm for RMB funds. Many foreign-invested venture capital firms have begun to experiment with RMB fund businesses, or newly established RMB funds to expand their original scale.

U.S. venture capital firm Plateau Capital is considering expanding its RMB fund business on the basis of traditional US dollar funds to cope with the cold winter in overseas markets. Jiyuan Capital, another foreign venture capital firm, recently raised the second phase of RMB funds, expanding the scale of its RMB funds from the original 300 million yuan to 1 billion yuan.

Zhuo Fumin, managing partner of Jiyuan Capital, said that although the overall global macroeconomic situation is uncertain, venture capital is still very optimistic about China's investment prospects. China has many investment opportunities in system reform, structural adjustment, and innovation and upgrading. "At present, the company's entire investment team is in a state of excitement and needs to be turned on 24 hours."

Kang Zhuxi, CEO of ICAP Capital Asia Pacific, an international venture capital firm, also expressed his optimism about China's development prospects, and expressed that he is very concerned about investment opportunities in the fields of mining, clean energy, new materials, large consumption, and medical health.

Kang Zhuxi said that the company currently has multiple investment reserves in China. Around the end of October, the company will also invest in two new projects in China, distributed in the mining and consumer sectors. In addition, out of optimism about the prospects of China's clean energy market, the company will also increase investment in this field in the future. "Invest when the market environment is poor, and harvest when the market environment is good." This is the investment principle pursued by venture capitalists. Tu Hongchuan, Managing Director of Plateau Capital, said that due to uncertain global economic prospects, corporate financing needs are even stronger. At present, the valuation of projects in China's primary market is gradually defoaming, and investment costs are reduced, creating a good investment opportunity for venture capital institutions.

For the cold winter in overseas markets, Tu Hongchuan believes that Chinese concept stocks will eventually survive this "winter" smoothly. Although there are "black sheep" among Chinese concept stocks, most companies have withstood the test of the market. "The window of Chinese companies' IPO in the US will soon be reopened." Said Crook Cowson, president of the international investor relations agency CCG Investor Relations Consulting Co., Ltd., the reason why China's concept stocks have continued to slump is to a certain extent and global Poor macroeconomic situation. "As long as the relevant economic data can continue to have positive performance for several weeks, the window of Chinese companies' IPO in the United States will be reopened."

Cowson said that although the US stock market, especially Chinese concept stocks, has been in a weak position for some time, there are still many Chinese companies still sticking to their plans to go public in the US. At least 50 Chinese companies are currently preparing to go public in the US and more than a dozen have already submitted applications to the US Securities and Exchange Commission and entered the registration stage.

The above information source "Venture Investment" is authorized by the China Venture Capital Research Institute (CVCRI) to publish it. All rights reserved. Please indicate the source when reprinting.

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