The suzhou AIC fund with a total scale of 40 billion yuan has new actions according to the star news on November 28.

At the suzhou Science and Technology Financial International Cooperation Development Conference and the third CNI yangtze Index Digital Financial Industry International Innovation Week, the two major state-owned asset groups in suzhou (suzhou asset management, suzhou venture capital) and five sectors (changshu city, kunshan city, wujiang district, huqiu district, xiangcheng district) signed framework agreements with five major AIC (financial asset investment companies) such as icbc capital, agricultural bank investment, bank of china assets, jianxin investment, and交银投资 and provided a list of intended investment projects.

Currently, there are a total of five AIC funds established in suzhou, with a total scale of 40 billion yuan, mainly funded by banks, state-owned assets at the municipal level, and state-owned assets at the district level. According to the star news, the suzhou AIC fund began its establishment at the end of September this year, and the signing of the framework agreement represents the formal establishment of the fund.

AIC refers to the financial asset investment companies primarily engaged in the conversion of bank debt to equity and supporting business, which serves as an important outlet for banks to participate in private equity investments. On September 24, the national financial supervision and administration issued a notice proposing to expand the pilot scope of equity investments by financial asset investment companies from shanghai to beijing, tianjin, chongqing, suzhou, and other 18 large and medium-sized cities; appropriately relax restrictions on the amount and proportion of equity investment, raising the proportion of investment in equity from the company’s on-balance sheet funds to total assets at the end of the previous quarter from the original 4% to 10%; while further improving the due diligence exemption and performance evaluation system.

Local institutional representatives in suzhou told the star news that once the policy was released, suzhou’s state-owned institutions began to connect with banks and simultaneously started project reserve work. Multiple investment institutions in suzhou expressed that they had received invitations to recommend projects and were encouraged to participate in the selection of reserved projects.

Currently, a number of projects have been locked in. The star news reporters learned on site that the five AIC funds signed intentions to invest (TS) contracts with 10 companies including tianbing aviation, botao intelligent, dianshi aviation, and aerospace era feipeng.

Institutions that received project invitation recommendations told the star news that at the time, AIC funds hoped to recommend projects with strong hard technology attributes, growth potential, and those that align with suzhou's “1030” industry system.

It is understood that the "1030" industrial system is a key industrial system being developed in suzhou. Among them, "10" includes 10 industrial clusters such as new energy, next-generation information technology, biomedical and health care, and high-end equipment. "30" refers to the further refinement and extension of these 10 key industrial clusters. For example, within the biomedical and health care industrial cluster, it can be subdivided into multiple industry chains such as innovative drugs, health care, and medical instruments.

The 10 enterprises that signed agreements this time all meet the above profile. Among them, projects related to commercial aviation are particularly favored by the suzhou AIC fund, with 3 out of 5 funds investing in projects in this field, including enterprises such as tianbing aviation, dianshi aviation, and aerospace times feipeng.

Reporters from the star daily noticed that these three companies are very young. Among them, tianbing aviation was established in 2019 and is the world’s first privately-owned rocket manufacturing company to successfully launch a liquid rocket on its first flight; aerospace times feipeng was established in 2020, initiated by the aerospace hi-tech holding group of china, in conjunction with domestic technology logistics company shunfeng group, to establish a mixed ownership enterprise specializing in the research and design, production, and operation of unmanned transportation aircraft systems; dianshi aviation, established in 2021, is a small aviation engine developer focusing on the design, research, and industrialization of small aviation engines.

In addition, the projects signed this time also involve several fields such as semiconductors, manufacturing, and new energy vehicles, with projects generally being at an early stage.

"This is a point where the AIC fund differs from the past. Previously, AIC invested with a debt mentality, preferring later-stage projects, focusing on the company’s assets, cash flow, and revenue situation, rarely involving early-stage technology projects. After the new regulations came out, the goal is to promote the AIC fund to invest early, invest small, invest in technology, shifting from valuing asset quality to assessing the future development potential of companies. This means the AIC fund needs to adjust the way it evaluates projects, the risk control system also needs to be re-calibrated, and even the internal assessment mechanism needs to be adjusted to match the new investment model," stated a practitioner from an early-stage investment institution to the star daily.

Institutions on-site also expressed an optimistic attitude, believing that the current AIC fund's approach of "investing early, investing small, investing in technology" is just starting out, and the demands from various parties are still being negotiated. More people may need to be recruited to participate in this system. If an effective methodology can be formed, it would be a new opportunity for projects and people in the market.