Rockley Group, a U.K.-based investment firm, has doubled the size of its Rockley China Fund LP after inking an agreement with the Shanxi Small and Medium Enterprise Investment Corporation, the technology venture fund owned by the Shanxi provincial government in China. The two will partner to develop business opportunities in Shanxi, China’s leading coal mining region. The firm’s China operations are based in Beijing.
Rockley Group, the technology funding group led by Andrew and Robert Rickman, has announced the expansion of its Rockley China Fund LP to US$200 million following the signature of an agreement with the Shanxi Small and Medium Enterprise Investment Corporation (SSMEIC), the high technology venture fund that is owned by the Shanxi provincial government.
SSMEIC and Rockley have agreed to raise a US$100 million fund – Shanxi Zhongying Rockley – and work together on a major new initiative to further develop the enterprise environment in Shanxi Province, China’s leading coal mining region. Shanxi’s GDP is US$100 billion and the province produces 25 per cent of China’s coal and 40 per cent of its coke supplies.
Last year, Rockley signed a similar agreement to raise a US$100 million fund with the Shandong High-Tech Investment Corporation and the Shandong Academy of Sciences. The fund, known as Rockley Luxin, has since been incorporated as a joint venture vehicle (foreign invested venture capital enterprise – FIVCE) and is also part of the wider Rockley China Fund LP, which is headquartered in Beijing.
Rockley and its partners have established the Shanxi fund and associated advisory and investment management business in Taiyuan City, Shanxi. 60% of the Shanxi fund (US$60 million) has been committed by SSMEIC with 40% (US$40 million) coming from Rockley. The fund is being set up as a FIVCE as this provides the most efficient structure for co-investor partners investing through Rockley.
The focus of the Shanxi fund, like that of the wider Rockley China Fund LP, is on investments in established technology companies in the energy, environment, ICT and health and safety sectors that require expansion capital. Target companies will have the likelihood of a major liquidity event within two to five years and benefit from support provided by the Rockley Shanxi team.
SSMEIC will provide access to development capital, deal flow and advice on regulatory issues. Technology management and further investment opportunities will be sourced from Rockley Group, which has a substantial portfolio of high quality technology companies in the UK, USA and China and will also advise on exit opportunities.
Dr Andrew Rickman, Rockley Group’s chairman, said: “We are delighted to be working with SSMEIC and pleased that they have agreed to commit capital and resources to this exciting initiative.
“The demand for technology solutions to support sustainable domestic economic growth in China will be one of the greatest investment plays of the next few decades.
Through the Rockley Shanxi initiative and Rockley China Fund, our investors will gain access to high quality deal flow from growing companies with proven products and services to meet that significant demand in China and beyond. We have a growing list of investors from Europe, Hong Kong and China who are attracted by this opportunity.
“Because of our extensive network and portfolio, we will also be able to combine globally sourced technology with established Chinese businesses to create exceptional investment opportunities.
“Together with our partners, we will contribute significant expertise and resources to support the development of an advanced enterprise environment in Shanxi. This combination makes the initiative a compelling investment opportunity and should also result in real lifestyle improvements, wealth and jobs for the region.”
Rockley Group, its partners and investor networks already offer access to a portfolio of technology companies that are examples of prime investment opportunities which are attractive to fund investors. The investors involved with the Group have developed the portfolio companies into stable, valuable businesses that are closing major commercial contracts and rapidly scaling profitable business models.
The Rockley Group portfolio includes such rising stars as Green Biologics (GBL), a world leader in biobutanol technology that has recently signed landmark agreements with the China – UK Low Carbon Enterprise Co Ltd (the joint venture company of the China Energy Conservation and Environmental Protection Group and the UK’s Carbon Trust), and two of China’s major biochemical firms. GBL will collaborate with its partners to roll out production of its next generation renewable chemicals and biofuels in China in a deal designed to boost China’s strategy of investment in renewable energy.
Another portfolio company, Shandong Micro-Sensor Photonics, China, provides fibre optic sensor systems and services to the energy sector. The company’s clients include major coal, oil and power producers. The sensors are used in the coal mining industry to improve safety and the company’s technology was highlighted as world-leading during the recent Chilean mine disaster. The sensors are also applied in the oil and gas industry to improve well extraction efficiency and in electrical power generation to optimise load efficiency. New markets to monitor CO2 sequestration and capture methane from coal mines are also emerging.
Kotura Inc, is a leading producer of silicon photonic circuits, which are used in fibre optic communication and sensing systems by telecom system manufacturers and computer companies. The company has assembly operations in China, which it will shortly be expanding to service the high level of demand for its products.
Rockley and SSMEIC have already started work on a company that commercialises stranded gas resources using compressed natural gas technology. This enables the cost effective and environmentally beneficially local use of gas from oil well flares, remote resources and coal bed methane as a substitute for fuel oil in electricity generation, for industrial and domestic use.