SPD Bank Being a Pioneer to Build a Long-term Cooperative Relationship with PEs
On 13th this month, the reporter learned from Shanghai Pudong Development Bank (“SPD Bank”) that the comprehensive strategic cooperation agreement, covering financial services such as cash management and financial consultation, was made and entered into by SPD Bank and Beijing Huida Jiuding Investment Management Co., Ltd. (“Jiuding Capital”) in recent days. SPD Bank is the first China-based bank that builds a long-term cooperative relationship with PE enterprises.
Experts told the reporter that this was not new to the world. For example, Silicon Valley Bank not only finances entrepreneurial enterprises but also holds a small amount of their shares, indicating that it acts as a venture capitalist.
According to information, it is ten years ago that SPD Bank started to pay attention to and be committed to development of industrial/entrepreneurial investment funds. It is the first China-based bank that carries out its hosted services for entrepreneurial investment. Currently, SPD Bank makes professional hosted services available for entrepreneurial investment enterprises from all over the country with different organization patterns and operation models.
In recent years, loan scale has been controlled on a strict base due to national macro-control, and hence banks are looking for new investment directions for their funds. In this context, it is undoubted that entrepreneurial investment enterprises become a new channel for banks to invest. Banks finance such enterprises, which not only offers support to small and medium-sized enterprises but also reduces their own credit fund risks by professional operation. In addition, they will increase their deposits by providing hosted services.
Ligen GUO, vice chairman of China Banking Regulatory Commission (CBRC), stated that commercial banks should keep exploring new ideas and performing system innovation and product innovation and provide effective financial support for development of high-tech companies.
It is reported that Jiuding Capital is a professional PE enterprise which has launched and managed three PE funds, with investment scopes ranging from the start-up phase to the phase to be listed. They have invested in many powerful enterprises such as Linoya Electronics, the largest cable connection manufacturer in China, and Harbin Coslight Storage Battery Co., Ltd., China’s largest VRLA battery manufacturer.