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Secrets of a successful PE firm (3)

By Cai Xiao  (China Daily)

08:18, September 21, 2012

Shan said his company set up the CSM Baiyun II Fund this year, which aims to raise 10 billion yuan. So far it has 2.5 billion yuan in its account.

The fund operator said there are many opportunities in China's villages and towns but few venture capitalists have looked there. CSM Group set up two funds totaling 750 million yuan in Zhouzhuang, a town under the jurisdiction of Jiangyin city, Jiangsu province, in 2010 and has made more than 10 deals valued at more than 700 million yuan.

Government guidance funds at town level became increasingly popular after the successful example in Zhouzhuang. Officials in seven other towns in Jiangyin contacted CSM Group to establish funds. In 2011, six such funds were set up in Zhongshan city, in Guangdong province, totaling 3 billion yuan.

In addition to branches in Beijing, Tianjin, Shanghai, Shenzhen and the provinces of Guangdong, Jiangsu, Anhui and Fujian, CSM Group has set up offices in the United States and Europe.

Since 2000, with its initial funds of 600,000 yuan, Shan has led CSM Group to become a company with 88 funds totaling more than 50 billion yuan committed to their management from their LPs, including more than 30 billion yuan now in accounts.

China was home to more than 10,000 VC and PE firms managing nearly 2 trillion yuan in assets at the end of last year, according to Liu Jianjun, an official at the National Development and Reform Commission's fiscal and financial affairs department.

CSM Group's archrivals include Shenzhen Capital Group Co Ltd, which now has 47 government guidance funds, 29 commercial funds and three Sino-foreign joint venture funds with a total value of 11.4 billion yuan across China.

Jin Haitao, chairman of the firm, said that the establishment of government guidance funds can make financing easier and broaden marketing channels.

Last year the company invested in 84 companies to the tune of 2.7 billion yuan. Eleven of them listed successfully.

Nanjing-based VC firm Govtor Capital Group received 55 million yuan from the Ministry of Science and Technology to build its high-tech-based small and medium-sized enterprise fund.

"The fund is operating well and we have invested in 11 companies. The government will remove its original investment funds without taking any profit to encourage the development of technology-based SMEs," Zhang Wei, chairman of Govtor Capital Group, told China Daily. The firm has 41 funds totaling more than 20 billion yuan under management.

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