CSRC gives nod to China’s first VC-controlled fund manager

12 June 2014   Category: News, Asia, China, Global   By Hui Ching-hoo

The China Securities Regulatory Commission (CSRC) has given the go-ahead to the formation of the Mainland’s first venture capital (VC) controlled mutual fund company, Redland Innovation Fund Management.

The approval signals that the financial watchdog is taking steps to diversify the scope of shareholders that control asset managers, from securities brokerages to insurance firms, private equity (PE) and VC.

Under the introduction of the amended Law of Securities Investment Funds last year, the requirements when it comes to being the major shareholder of an asset manager have been relaxed significantly.   

Founded by Chinese VC giant Shenzhen Capital Group (SCG), Redland Innovation Fund Management has registered capital of 100 million RMB (US$16 million). SCG has investments in 91 domestic and overseas listed companies, with average internal rate of return (IRR) of 36%.

An analyst from Z-Ben Advisors told Asia Asset Management that a number of leading Chinese PE firms were seeking to break into the mutual fund industry: “We foresee more PEs or VCs to come on stream. The newcomers are expected to launch mutual fund products linked with their non-core businesses. The projects are mainly designed for a small group of high net worth individuals.”