Analysis of the situations of Government Leading Fund in China

The first government leading fund in China was setup in 2002, which name is Zhongguangchun Government Leading Fund of Venture Capital.During nearly 15years developed, the Government Leading Fund from a child grows up to a young lady base on a set of convention and rules from government.Now, the Government Leading funs tend to one of important LP in capital market.There is serious competition in PE market who wants to work with Government Leading Fund.The reason is that the Government Leading Fund has some nature advantages in scale and goal of investment.This article wills discuses the situation of Chinese Government Leading Fund.And then propose some suggest about how to jump out of this situation.Government Leading Fund is established by the government's financial capital.The goal of Government Leading Fund is attracting social capitals, some local government capitals and private equity.The purpose of Government Leading fund is not earning profits.It is use the equity, debt and other methods to invest in venture capital in order to support the business and the development of local economy. The situation of Government Leading Fund in ChinaFirstly, the number of Government Leading Fund increases quickly.The first Government Leading Fund was born in 2002.But after 2007's financial crisis, Government Leading Fund accelerate the develop seed.There are parts of provinces and cities began to fund theirs regional Government Leading Fund.According Qingke Group's data, there are 96 Government Leading Fund in China.The capital scale is RMB 700 billion.In 2014, the number of Government leading Fund jump to 209 and control RMB 1293.39 billion.Each Government Leading Fund's scale is over RMB 6.19 billion.Secondly, the distribution of Government Leading Fund has area difference.There are two hot areas in map of Government leading Fund.They are ChangJiang area and Bohai gulf.Based on Zhongtou Group's CVSource until 2014, there are 90 Government Leading Fund was funded in Huadong district.The target scale is RMB601 billion.It seems to be NO.1 in China.The number of government Leading Fund in southwest and northeast are 18 and 35, and the capital scopes are RMB 248 billion and RMB144.6 billion.The last part of Huanan district, the scale and the number of Government Leading Fund are RMB114.78 billion and 35.And then, the Healthcare, TMT, clean energy and environmental protection are most three favorite investment fields.Depend on Zhongtou Group's CVSource, these three fields count to 20%, 19% and 19% in all invest projects.Thirdly, the Government Leading Fund has some special operating requirements.The Government Leading Fund usually requires sub-fund invest in the local by the mount of government investment 50%-70%.If invest in early stage of one industry, this kind of investment seem to push the development of corporation in quantity and scope.For example, in Longgang district Shengzhen city's Government Leading Fund of venture capital, the government contributive RMB1.8 billion.But the scale of sub-fund comes to RMB11.80 billion, increasing 6.58 times.It seems to be shown the financial leverage of government capital.