The Beijing municipal government is in the process to establish a Zhongguancun industry M&A fund-of-funds with targeted fundraising total of RMB30 billion (US$4.5 billion), according to Chinese media reports.
The fund-of-funds will pool capital from a mixture of government and private entities, including Beijing Haidian M&A Guide Fund, a Haidian state-owned assets unit, unnamed public companies and financial institutions.
The fund, which seeks to raise RMB10 billion initially, aims to use financial leverage by establishing subsidiary funds to raise additional private capital to eventually support M&A deals worth as much as RMB200 billion (US$30 billion).
It will invest in large public and private companies valued at over RMB10 billion, with a priority to back pioneering Haidian district-based firms.
Zhongguancun Development Group and Beijing Jingneng Clean Energy have reportedly joined the project as limited partners, says Chinese media reports.
Unlike some public-private partnership funds established in other parts of the country, Beijing's Haidian district is home to 172 publicly listed companies, with the majority of which valued at around RMB10 billion.
The district also hosts Internet giants such as Xiaomi and Baidu Inc.
The fund's objective is to push for industry consolidation and create over 15 companies valued at over RMB100 billion, says the reports.
The vehicle has a three-year investment period and a four-year exit phase. It plans to do 30 to 40 deals a year in emerging new industry sectors.