Shares of a few dozen China-based start-ups may be up for grabs as their investor, US venture-capital firm Eight Roads, plans to exit its Chinese technology holdings.
The move, reported by Bloomberg on Tuesday, comes as geopolitical tensions and a sluggish Chinese economy prompt some global investors to retreat. Domestic and government-backed funds and financing products would increasingly drive start-up funding in the world’s second-largest economy, analysts said.
Fidelity Ventures-backed Eight Roads, an early investor in China’s internet sector including Alibaba Group Holding, began exploring the divestment of about 40 Chinese tech companies earlier this year, people familiar with the matter told Bloomberg. The firm has invested around US$1.1 billion in about 130 Chinese companies, according to its website. Alibaba owns the Post.
The companies would be sold at a discount ranging from 60 per cent to 80 per cent of their peak valuation, which was about US$1 billion combined, the report said. The stakes include that of self-driving car company Pony.ai, which Eight Roads still holds due to a lock-up period.
Eight Roads was expected to focus on its healthcare business in China. The company did not respond to the Post’s request for comments.
Venture-capital financing in China more than halved to US$6 billion in the first quarter of this year from a year earlier amid a regional decline, according to a KPMG report.
“The downturn was largely driven by persistent challenges in China, including economic uncertainty and ongoing real estate sector issues” amid broader geopolitical tensions, the report said.
