Chinese investment firm GSR Capital is launching a $5 billion fund to invest in global technology companies, counting on huge demand at home to create economies of scale in pharmaceuticals, energy saving and mobile phone technology.
Little known GSR Capital shot into the limelight in April when it teamed up with other investors to buy Philips's lighting component unit for $2.8 billion, trumping marquee buyout firms, including a joint offer by KKR & Co and CVC Capital and a separate one from Bain Capital.
The fund is targeting cross-border buyouts and M&A in industrial and emerging technology companies, including electric car batteries and pharmaceuticals.
"Growth now in the U.S., in Europe and in Asia is soft... but within that, some sectors are hot, primarily in the technology space," Sonny Wu, co-founder of GSR Ventures and Chairman of GSR Capital, said in an interview.
The company is backing the so-called GSR Global M&A Fund with $1 billion from its own GSR GO Scale Capital LP unit and unnamed institutional investors, with the remainder still to come from outside investors.
The fundraising is coming on the heels of increased volatility in Chinese equity markets in the past several weeks, with a slump in mainland China markets from mid-June wiping out more than $3 trillion in market value of listed companies.
Chinese technology companies have been trying to become more global, buying out internationally recognizable brands and tapping international markets to get closer to overseas investors. China's state-owned Tsinghua Unigroup is eyeing a bid for U.S.-listed Micron Technology Inc for about $23 billion, set to be China's biggest ever outbound M&A.
The deal followed the record-breaking $25 billion IPO last year in New York of e-commerce giant Alibaba Group Holding Ltd.
GSR Ventures currently manages about $2 billion and it teamed up with bigger partner Oak Investment Partners and billionaire Chinese solar magnate Cheng Kin Ming to buy the Philips unit. GSR and Oak have previously jointly invested in LED lighting firm SunSun Lighting and battery maker Boston Power, where Cheng is also an investor, among others.
