Israel's venture capital giant Pitango plans to team up with a Chinese partner to launch a $100-$200 million fund with investment focus on China's start-up companies, sources said on Wednesday.
Pitango Venture Capital, run by Nechemia Peres, son of Israeli President Shimon Peres, is in talks with Shenzhen Capital Group Co Ltd, to raise a China-focused investment fund, said the sources with direct knowledge of the matter. Shenzhen Capital is China's top venture capital firm.
Pitango is a big name in Israel but still little-known in China so now it should be the right time for Pitango to team up with a right partner to expand its investments in China like what its rivals have already done, said one source.
No agreement has been inked between the two parties, said the sources who declined to be identified as the negotiations are confidential. Pitango hopes to mainly invest in China's high technology-related sectors through the new fund, they said.
Shenzhen Capital declined to comment, while Pitango, based in Herzliya, a seaside suburb north of Tel Aviv, was not immediately available for comment.
Pitango is one of Israel's largest venture capital firms, having invested in over 100 companies in seed, early and growth stages in a wide range of technology sectors in the past 14 years, according to its company site. (www.pitango.com)
Pitango, which also has an office in the Silicon Valley in the United States, manages funds in excess of $1.3 billion in committed capital from international investors.
Earlier this month, Wilson Lee, president of Shenzhen Capital, based in southern Chinese boomtown of Shenzhen, bordering Hong Kong, told Reuters the firm aims to double its funds under management to more than 20 billion yuan ($2.48 billion) in three years.
This week, a Pitango delegation led by Nechemia Peres is traveling in China to meet Chinese government officials and business partners including senior representatives from Shenzhen Capital, said the sources.
Chinese state media on Wednesday reported Peres' visit without giving further details about Pitango's fund plan.
The local Shenzhen government, which is the de facto boss of Shenzhen Capital, has shown strong support to Pitango's China fund plan, which may also need approvals from financial regulators in Beijing, said the sources.
Pitango's smaller rival Infinity Equity manages more than $600 million through three funds, two of which are in China.
Infinity-I China, its most recent China fund, is founded by IDB Development IDBD.TA subsidiary Clal Industries of Israel, state-owned China Development Bank and China Singapore Suzhou Industrial Park Ventures Co, a firm backed by both Singaporean and Chinese governments.
(Editing by Lincoln Feast)