The Chinese Academy of Sciences Holdings (CAS Holdings), the largest shareholder of conglomerate Legend Holdings and the ultimate parent of Lenovo Group, aims to launch China’s first technology-focused bank and insurance firm by the end of 2019.
Beijing-based CAS, China’s highest natural science research and education institution, aims to fill a market gap for funding innovative start-ups.
“The main service targets of the proposed technology bank and insurer are high and new technology companies,” CAS chairman Wu Lebin said in an interview at the sidelines of the Boao Forum last week.
“We don’t have a limit for the industry segments they will serve, it depends on where technological development brings us.”
CAS directly controls 48 companies, of which 25 are publically traded, including the Hong Kong-listed firms Legend and Lenovo.
Wu said technology start-ups have difficulties getting the financial services they need from China’s commercial banks and insurers, while venture capital and private equity firms are only filling part of the gap.
“Our proposed bank and insurer’s services will complement equity capital provided by venture capital and private equity firms,” he said, adding that the bank will serve mainly small start-ups while the insurer will also serve larger companies.
“We aim to provide a complete suite of insurance services from the time a project’s business negotiations start, through to product manufacturing, sales and marketing, to help technology firms mitigate risks,”
He said the model had been developed in Israel, home to many successful start-ups, while the United States operates a similar concept in Silicon Valley Bank.
CAS is the lead promoter of the proposed commercial bank and insurer, and is working with various state and private firms whose identity he would not disclose, to get them off the ground.
CAS has also reached a “cooperation understanding” with the Shanghai municipal government on the initiative, Wu said.
“We started the application process last year and have been communicating with China’s insurance and banking regulatory bodies,” he said. “From the feedback we got, I expect the insurer to be approved faster than the bank.”
The proposed insurer will need to have at least five founding shareholders, and at least 1 billion yuan (US$145.44 million) of registered capital.
While the proposed bank will be a for-profit commercial entity, he said he hoped it will be supported by favourable government policies.
Separately, he said Shanghai Bi Ke Clean Energy Technology, a firm controlled by CAS, has developed a technology to convert natural gas into methanol that can be consumed as a motor fuel in an environmentally sustainable way with “ultra-low emission”.
The company plans to join other Chinese and American companies in building a US$6 billion plant in Washington state to convert low-cost US natural gas extracted from shale rock to methanol.
Methanol production is expected to start as early as 2019, and the fuel will be shipped to China by seaborne carriers.
Article : Eric NG – Source : South China Morning Post