Shang Qi Capital, a private equity (PE) firm affiliated with Chinese state-owned automaker SAIC Motor Corp, has held the first close of a new technology innovation fund at 598 million yuan ($84.3 million) to invest in AI-powered auto industry chain opportunities.
The fund, which has a target of 800 million yuan ($112.8 million), plans to back early- to mid-stage startups that “are revolutionising the auto industry through fundamental hard tech innovations centred around AI and new-generation auto tech,” said the firm in an announcement on Sept. 14.
Shang Qi Capital said the RMB-denominated fund, which will only invest in China, will help it capture tech iterations in 5G, AI, and their applications in cockpits for building intelligent connected vehicles of the future. Specifically, the fund will focus on breakthroughs and commercialisation across various AI segments, such as machine vision, natural language processing (NLP), and big data.
The firm expects these core tech advancements to upgrade not only the auto industry but also the entire Chinese economy into “a more digital, intelligent, internet-driven, and new energy-powered era”.
Feng Ji, managing partner of Shang Qi Capital, said: “The macro-economic environment is going through a downturn featured by tightened liquidity and limited exit options. But it may just be the best day and time [for private-market investments].”
“Tech innovations are emerging as the main force driving national growth, leading China into a tech-driven new era. Tremendous investment opportunities and industry changes brought about by the rise of AI will see early-stage investors enjoy the best time to capture counter-cyclical startups with great innovation potential,” said Feng.
For the first close of the RMB fund, Shanghai-based Shang Qi Capital roped in multiple institutional investors including large guidance funds, state capital investment platforms, and private and industry capital investors in China.
Founded in 2012, Shang Qi Capital has backed more than 200 companies across the auto industry chain, covering new energy, new materials, intelligent vehicles, and smart auto manufacturing solutions. Its accumulated assets under management (AUM) have reached 42.8 billion yuan ($6 billion).
Some of its best-known portfolio companies include Chinese electric vehicle (EV) battery giant Contemporary Amperex Technology Co Limited (CATL) and the country’s rare earth heavyweight JL Mag. Its more recent deals include the Series A round of new materials startup MTM in September and a July investment in a Series B extension round of Shanghai-based chip design house eTopus.
As of today, Shang Qi Capital has fully or partially exited 59 portfolio companies, including 29 through initial public offerings (IPOs). Its latest exit is the 713.4-million-yuan ($100.6 million) public listing by Flaircomm Microelectronics, a developer of intelligent connected car systems, on the main board of the Shenzhen stock exchange on September 11.
