Jiangxi's first provincial science and technology innovation fund has started recruiting GPs, as reported by the Science and Technology Innovation Daily on November 8th.

Recently, the Department of Science and Technology of Jiangxi Province issued a public announcement about soliciting management agencies for the subsidiary funds of Jiangxi Province Xingan Technology Innovation Equity Investment Fund, which combines Jiangxi State-Control, Ganfeng Lithium, and Swhy, and officially started collecting GPs.

The Jiangxi Xingan Technology Innovation Equity Investment Fund (referred to as Xingan Innovation Fund) is part of Jiangxi Province's modern industrial guidance fund system and is expected to have a target size of 2 billion yuan.

Among them, the Jiangxi Province Modern Industrial Guidance Fund managed by Jiangxi State-Control has a subscribed capital of 0.6 billion yuan, accounting for 30%; the main body designated by the Jiangxi Science and Technology Department has a subscribed capital of 0.4 billion yuan, accounting for 20%; the investment platform of Ganjiang New District has a subscribed capital of 0.4 billion yuan, accounting for 20%; Shenyi Hongyuan's investment platform Shenyi Chuangxin Investment has a subscribed capital of 0.333 billion yuan, accounting for 16.67%; Ganfeng Lithium has a subscribed capital of 0.2 billion yuan, accounting for 10%.

The LP structure also reflects the importance of this innovation fund in Jiangxi Province. The ratio of local state-owned assets to market-based capital is 7:3, and the LP of the innovation fund includes both brokerage firms and large listed companies in the province. In addition, the management agency for the innovation fund chose the wholly-owned subsidiary Hongyuan Huifu under Shenyi Hongyuan, which is a brokerage firm directly involved in equity investment business approved by the China Securities Regulatory Commission.

Institutional investors who have previously collaborated with Jiangxi State-Owned Capital to establish industrial funds told the Science and Technology Innovation Daily that Jiangxi has been focusing on fund matrix since last year, especially the establishment of the billion-dollar Modern Industrial Guidance Fund system, which has attracted many institutions. This innovation fund is quite friendly to early institutional investors. Based on past interactions, relevant government departments are paying significant attention to industrial funds, providing substantial support.

This is also reflected in the announcement for soliciting subsidiary funds, where both reinvestment and contribution ratios have been relaxed. Currently, Xingan Innovation Fund can raise the contribution ratio to angel and venture capital sub-funds to 50%; for projects that meet Jiangxi Province's major innovation layout, a single project sub-fund can be established, with contributions not subject to the above proportion limit.

A senior fundraising officer told Star Daily that the complete removal of the investment ratio limit for single project sub-funds indicates that there is already a consensus in Jiangxi Province to 'give the green light' to major projects, giving fund managers more motivation.

In terms of reinvestment, Xingan Sci-Tech Innovation Fund has also offered very sincere conditions - the investment amount of sub-funds in Jiangxi Province should not be lower than the actual contribution amount of Sci-Tech Innovation Fund. In other words, reinvestment is only at a one-to-one ratio. The management institutions of the sub-funds can be recognized as reinvestment when investing in enterprises within or introduced to Jiangxi Province by other funds under their management.

The aforementioned fundraising officer stated that currently, the government-guided fund reinvestment ratios in domestic provinces and cities mostly range from 1.2 to 1.5 times. Jiangxi Province has reduced it to 1 time this time, and projects from other managed funds can also participate in reinvestment recognition, providing management institutions with significant flexibility to match different funds and projects to meet reinvestment requirements.

However, in correspondence, Xingan Sci-Tech Innovation Fund has set high conditions for project reserves and fundraising capabilities. This application requires the applying institution of the sub-funds to provide a list of reserve projects, with the planned investment amount in reserve projects not less than 50% of the first installment of the actual contribution of the sub-funds, and the planned investment in attracting or reinvestment-type reserve projects not lower than the initial capital of the Sci-Tech Innovation Fund.

In terms of investment direction, Xingan Sci-Tech Innovation Fund has defined explicit scopes, including strategic emerging industries such as the Internet of Things, big data, artificial intelligence, virtual reality, new energy and new materials, biomedical industry, as well as university, research institute platforms for the transformation of academic research results, ensuring the cultivation of technology-based enterprises, the transformation of scientific and technological achievements, and collaborative innovation.

Furthermore, institutions should have secured at least 50% of the intended funds for the establishment of the sub-funds when submitting application materials (excluding the Sci-Tech Innovation Fund application contribution), and provide commitment letters and letters of intent from prospective investors.

The general scarcity of market-oriented funds is currently a common challenge in the market. An investment institution once mentioned to a reporter from Star Daily that although they had passed the government-guided fund review with their funds, their plans fell through because the market-oriented limited partner funds were not in place.

The aforementioned fundraising officer also stated, "Currently, the fundraising pressure lies with market-oriented limited partners. Even popular semiconductor funds aiming to fundraise over 1 billion find it challenging. The mainstream fund sizes today are in the range of 0.5-1 billion. Achieving the 50% requirement is not easy. Considering the reinvestment requirements, large management scale, or institutions with a history of many investment projects may have an advantage."