VC firms set to boost yuan investments
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Venture capital firms are set to raise their yuan-denominated investments in China this year, boosted by the launch of a Nasdaq-style board for promising start-ups and a more conducive environment, a report said.
Of the total investments by VC firms last year, 50.7 percent, or US$1.37 billion, were invested in 297 yuan-denominated projects while the remaining funds went to 169 foreign-currency projects, according to the Zero2IPO Research Center.
"Many foreign investors adjusted their strategies and slowed investments amid the credit crunch, which led to cautious foreign-currency investments last year," said Lin Wanting, an analyst of Zero2IPO.
Meanwhile, the launch of ChiNext for startups with good growth potential accelerated yuan-denominated investments by VC firms, which usually invest in such firms, Lin said.
Of the 99 companies which launched initial public offerings on the Chinese mainland last year, 47 were backed by VC and private equity firms. Zero2IPO sees the trend to continue this year as 31 out of 107 IPO firms have got backing from VC and PE firms.
The Chinese government is encouraging the development of the VC and PE markets as part of its strategy to propel economic recovery.
"Local venture capital firms are growing rapidly and turning more professional, and their foreign peers are also seeking investment openings as they eye the country's strong economic growth, so we believe yuan-denominated investments will snatch a bigger share of the Chinese market," Zero2IPO said.
