Plan calls for wide range of service outsourcing centers

Attracted by the enormous potential, a growing number of venture capital (VC) and private equity (PE) companies are settling in Guangdong High Tech Service Zone for Financial Institutions.

During a seminar in late November, 10 VC companies signed agreements with the administrative committee of the zone to set up operations.

Newcomers include Shenzhen Capital Group, Fortune Venture Capital, Kunwu Jiuding Capital and China Science and Merchants Capital Management Ltd,

With the arrivals, the number of VC and PE firms in the zone now totals 20. Together they are expected to raise up to 4.5 billion yuan in capital.

"The zone is also negotiating with 50 more VC and PE firms," said Ou Bangmin, head of Nanhai district government and director of the zone's administrative committee.

Ou said that the zone will be able to raise 20 billion yuan in capital when the other VC and PE firms arrive.

"The settlement of the VC and PE firms will help to turn the zone into an optimal venue aggregating PE and VC in China," he said. "It enjoys every advantage for PE and VC development."

"On one hand, Nanhai is a well-off district with affluent reserve of capital," he noted. "On the other, there is a ready market in Nanhai as many new and high-tech firms are looking for capital and strategic investors."

Individual saving deposits totaled 144.6 billion yuan at the end of June. The savings per capita top all regions nationwide, official statistics indicate.

The official said he hopes to see 30 to 50 companies get listed at home and abroad in the upcoming 12th Five-Year Plan period (2011-2015).

Eight of Nanhai's local companies were listed on the mainland, in Hong Kong and in Singapore in 2009.

He said the Nanhai district government and the administrative committee of the zone have jointly mapped out measures to encourage development of the PE and VC sectors and to boost the integration of finance, technology and the manufacturing industry.

At least 60 companies in Foshan have plans to be listed in the next four years to raise more than 30 billion yuan in capital, according Chen Yunxian, secretary of the municipal Party committee of Foshan and a senior financial expert formerly chaired a leading securities company in Guangdong.

Chen said the city has a solid foundation for the development of PE and VC and good advantages to grow into a model city integrating finance, science and technology with secondary industries.

Chen said Foshan has 16 enterprises with an annual industrial output between 10 billion yuan and 100 billion yuan each, more than 250 between 1 billion yuan and 10 billion yuan and more than 2,200 enterprises that generate over 100 million.

Company cash on hand now surpasses 800 billion yuan, he said.

The official's remarks are echoed by VC professionals.

One of them is Xiao Bing, chairman of Shenzhen-based Fortune Venture Capital.

Xiao said the geographical advantages, abundant projects, availability of rich private savings and expertise in finance among government officials are good reasons for the zone to become a preferred destination of VC and PE firms.

Convenient transport with the new station on the high-speed rail line linking Guangzhou to Shenzhen and Hong Kong, as well as and the intercity metro, will also help attract firms from those cities, Xiao said.

He noted the large number of private-sector companies in Foshan makes it easy for PE and VC firms to find investment projects.

During a seminar late last month, five VC firms signed agreements with five local companies to provide capital.

Shenzhen Capital Group linked with Guangdong Delian Group, Fortune Venture Capital with Dongfang Jinggong, Guangdong Technology Venture Capital Group with Telepower Communication Co Ltd, China Science and Merchants Capital Management Ltd with Guangdong Real Faith Enterprises Group Co Ltd, and Success Capital Partners with Foshan Nanhai Dongxing Plastic Cans Co Ltd.

(China Daily 12/14/2010 page12)