China Data Insight (Q3 2018)


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Fundraising for China-focused private capital vehicles reached US$31 billion in the first three quarters of 2018, more than double the US$15 billion raised in 2017. Closes for nine funds of US$1 billion or more, of which eight were U.S. dollar-denomi-nated, drove this sharp uptick. Chinese venture capital (VC) continues to be a popular asset class for investors, exemplified by the close of Yunfeng Capital’s latest fund at US$2.5 billion in August. Despite a quarterly decline in VC deal count, disclosed capital invested in VC deals has already exceeded last year’s total by US$3 billion. Much of this capital is being deployed in the electric vehicle (EV) space, which until recently received limited attention from the country’s leading fund managers. Prompted by the Chinese government’s policies to encourage EV production and provide monetary subsidies for EV purchasers, capital invested in EV manufacturers reached US$1.7 billion in Q1-Q3 2018. Alibaba-backed EV startup XPENG Motors received a US$587 million investment from Primavera Capital and Morningside Ventures in August, the largest EV private capital transac-tion completed so far this year. As manufacturers prepare to meet rising consumer demand, additional private investment activity in the space is likely in the months ahead. China’s EV investment boom has perhaps just begun.