Itochu, CITIC plan venture funds with $1.8 billion to help startups push for China

09, Jul. 2019

TOKYO, NNA – Major Japanese trading house Itochu Corp. and China’s state-backed CITIC Ltd. group are to set up two funds with up to 200 billion yen ($1.8 billion) to invest to help startups in Japan and other advanced economies get a foothold in the Chinese market.

The Japanese company signed a memorandum of understanding on Friday on the establishment of U.S. dollar and Chinese yuan-denominated funds with Hong Kong-based XinJing Holding, a unit of the Chinese group, Itochu spokesman Hikaru Inadome told NNA.

The two companies will use the dollar fund, with an initial $500 million, to start investing in August in promising firms outside China in the fields of information technology, telecommunications, healthcare and advanced manufacturing such as the internet of things and artificial intelligence, he said.

A single deal to back companies with at least 5 billion yen in sales is likely to range between about several million yen to hundreds of million yen, Inadome said.

Itochu will identify prospective investment targets while the CITIC group will help them build business models in China. Tus-Holdings Co., a science and technology investment vehicle of Tsinghua University, has also decided to engage in assessing the technologies and value of startups, Inadome said.

The groups also plan a 4 billion yuan ($581 million) fund to support the startups to enter the Chinese market and expand their business there, he said.

They will eventually boost the combined size of the two funds up to 200 billion yen, Inadome added without giving a timeframe. “We expect a large number of firms will want to enter China amid relaxing regulations,” the spokesman said.