Top private equity firm moves to tap venture capital globally

Visitors look at a robot at an innovation summit held in Guangzhou, capital of Guangdong province, which was sponsored by China Science and Merchants Investment Management Group. [Photo by Tan Qingju/China Daily]

Leading private equity firm China Science and Merchants Investment Management Group said it plans to seek venture capital from partners in Israel, Germany, Japan, the United Kingdom and Russia in the current year to fulfill plans to expand internationally.

The company said on Tuesday it will seek deals with companies similar to AngelList rather than looking for single transactions.

In 2015 CSM Group invested $400 million in AngelList, a US website for connecting startups and angel investors, as well as helping job-seekers looking to work at startups. The platform helped startups complete more than 1,000 financing deals in 2016.

Last year CSM signed a multimillion-pound cooperation agreement with UK artificial intelligence startup incubator Founders Factory. The partners jointly hire staff, invest in five early-stage AI startups and launch new companies.

China Science and Merchants Investment Management Group, in its 2016 annual report released on Tuesday, reported revenue of 480.6 million yuan ($69.7 million), a 4.8 percent increase year-on-year.

The New Third Board-listed company posted net attributable earnings of 11.1 million yuan, down 99 percent year-on-year.

Company Secretary Peng Wei said cost increases, investment loses were among the main reasons for the profit reversal.

CSM reported operating costs of 1 billion yuan in 2016, with management fees and financial costs increased the most. Management fees rose to 464 million yuan in 2016, up from 306 million yuan in 2015, and financial costs increased to 383 million yuan last year against 64.2 million yuan in 2015.

Due to current accounting criteria, most potential investment returns for CSM Group were not shown in the financial report, CSM said.

The private equity firm said that eight companies it invested in－including Nancal Energy-Saving Technology Co Ltd and Inventronics (Hangzhou) Inc－had initial public offerings in 2016 and Zhuhai Rundu Pharmaceutical Co Ltd's IPO application was approved by China's securities regulator.