A private equity secondary (S) fund of Shenzhen Capital Group was established in Zhuhai on Dec 10 and will initiate investments at the beginning of the year with a targeted scale of 10 billion yuan ($1.4 billion).

The fund registered in Hengqin New Area on Oct 16. The initial sum placed by cornerstone investors Shenzhen Capital Group and Zhuhai Gree Group amounts to 5 billion yuan ($711 million).

It will invest primarily in limited partner (LP) private equity share and portfolios, providing support in private equity market liquidity, investment diversification, and risk management.

Ni Zewang, chairman of Shenzhen Capital Group, speaks at the launch ceremony [Photo by Song Xuemei / Zhuhai Daily] 

According to Liu Bo, vice chairman of Shenzhen Capital Group, the fund will be a major connector and trading center of general partners (GP), LP, and mother fund organizations in the country. It is intended to ease difficulties in fundraising and investment, and thus better serve the real economy.

The company plans to establish a platform devoted to venture capital investment, with the fund as helping to unite parties to advance the economic development of the Guangdong-Hong Kong-Macao Greater Bay Area, said Ni Zewang, chairman of Shenzhen Capital Group.

Zhang Yisheng, deputy mayor of Zhuhai, said construction of the Greater Bay Area and Guangzhou-Zhuhai-Macao Science & Technology Innovation Corridor bring great opportunities for the city to develop characterized finance. It is expected that the fund will assist in innovation, entrepreneurship, and industrial development, while bringing more innovative technologies, talents, and emerging industries to Zhuhai.

The Zhuhai Forum on Private Equity Secondary Market later addressed how characterized finance could further exert its role in Greater Bay Area construction. Ni Zhengdong, founder and chairman of Zero2IPO Group, and Xiu Zhiming, managing partner of TR Capital, delivered keynote speeches.

Representatives of Sequoia Capital China, IDG Capital, Matrix Partners China, and Fortune Capital attended the forum and took part in a roundtable discussion.

A secondary fund partnership acquires assets and securities through the secondary market rather than the primary market. It is composed of assets that have been purchased directly from other investors instead of the underlying company itself. Secondary funds are common in private equity, venture capital, and hedge funds.