High-Tech Gründerfonds (HTGF) concludes a cooperation agreement with one of China’s most successful investment banks – Donghai Securities (Donghai)
October 29, 2015
China is the world’s largest and most dynamic market, and one that is difficult for small companies to develop. The Chinese investment bank Donghai Securities and the German HTGF have therefore concluded a cooperation agreement that will allow German high-tech companies to access this important market. Not only will Donghai contribute its expertise and excellent contacts, it will also facilitate German high-tech companies with capital resources for production set-up and market launch in China. HTGF can now offer selected portfolio companies access to capital and expertise, with the aim of helping them gain a foothold in the Asian market and grow significantly. Up to 300 million euros is targeted to be invested in German start-ups over the next five years with the help of Donghai and HTGF.
Last year China and Germany announced to carry out the cooperation in “Industry 4.0″in the Action Outline for China-Germany Cooperation issued after the third round of China-Germany inter-governmental consultations. As a rapidly developing and urbanising country, China is looking to use information and communications technologies to make its fast expanding cities smarter and enable a better quality of life for their citizens. However, China is also facing great challenges. The demographic trend is leading to an aging society with a growing need for medical innovations. Urbanisation requires new energy and environmental concepts. Accordingly, Donghai is mainly focused on the life sciences, clean technology, Internet of Things (IOT) and Industry 4.0 sectors.
Prof. Kai Desinger, initiator of the cooperation points out: “Life Science and Cleantech Start ups face the challenge to spend a lot of energy in market and production structure if they want to expand into foreign contries. Besides this product development is very capital-intensive. Without strong partners in the new market this challenge is not feasible. The asian market has a lot of potential. I am very happy, that I could initiate the cooperation with Donghai Securities.“
Zhu Kemin, Chairman of Donghai, is confident about the agreement: “In cooperating with Europe’s most active seed fund, we see an outstanding opportunity to establish urgently needed technologies and business concepts from the fields of life sciences, clean tech and Industry 4.0. Thanks to our capital and market expertise, all participants win.”
Dr. Michael Brandkamp, Managing Director of HTGF, adds: “In order to grow, start-ups must operate internationally. For many HTGF portfolio companies, it is very worthwhile to acquire access to Chinese markets and develop production in China. Both need a lot of capital and support from insiders who know how to do business in China. With Donghai, we have an excellent partner here.”
The agreement was signed by Zhu Kemin and Dr. Michael Brandkamp within a signing ceremony which was led by Chinese Premier Li Keqiang and German chancellor Angela Merkel.
HTGF sees considerable additional potential for its companies. Around 50 percent of the follow-up financing into HTGF’s portfolio already comes from abroad.
In spite of significant competitive advantages, production, market access, and growth represent a task that is difficult to solve for young high-tech companies in Germany. Growth financing in Germany has become a bottleneck. Not only does China have large financial resources, but it also offers the opportunity to address really large market potential. All large German companies are active in China. The small ones, however, need strong local partners that not only understand business in China and the entire Asian market but also have the right contacts.
These partners in China have understood for a long time that just a straight company transfer from Germany to China will not work. Instead, they want to expand the German location so that production, quality, and innovation can be permanently secured.
For German early phase investors, the outstanding expertise of Donghai in the capital market also results in additional exit possibilities with major dynamic capital market (China mainland market and Hong Kong market). The chairman of the investment bank, Zhu Kemin, has recognized the cooperation potential. His team – led by Dr. Alex Liu, who, having earned his PhD at Cambridge, knows the European market and its culture – is professional and fully committed to the task. In Germany, Donghai is supported by entrepreneur and investor Prof. Dr.-Ing. Kai Desinger, who initiated the agreement between Donghai and HTGF and will help and advise in the selection process and supports companies by making them fit for Donghai and the Chinese market.
The first participation of a HTGF-financed company will soon be concluded.
About Donghai Securities
Donghai was established in 1993. It is one of the earliest founded investment banks operated with full licenses in China. Donghai is a front runner in equity investment, as well as in fixed-income, derivatives and other innovative businesses, managing assets amounting to EUR 30 billion (CNY 200 billion). Donghai has established solid relationships with many listed companies, investment banks and other financial institutions through equity investment and M&A businesses, realizing its wide industry coverage with abundant resources.
About Kai Desinger
Prof. Dr.-Ing. Kai Desinger is a successful entrepreneur and manager. He provides consulting services for government agencies on the state and federal level regarding technology transfer, corporate financing and MedTech clusters. In 1999, he founded Celon AG medical and successfully sold it to the Japanese blue chip company Olympus Medical in 2005. In 2012, Mr. Desinger was awarded the title of honorary professor at the Technical University of Berlin. In 2005, he was appointed by the former German Chancellor Gerhard Schröder to the Federal government initiative “Partners for Innovation”. Here, he was involved in the design of the current High-Tech Gründerfonds. In 2007, he was appointed as a committee member of the “High-Tech Gründerfonds” of KfW by the Federal Ministry of Economic Affairs and Industry and since 2009 he has been chairing the investment committee of the High-Tech Gründerfonds. In 2015, Mr. Desinger initiated the strategic cooperation between Donghai and HTGF.
About High-Tech Gruenderfonds (HTGF)
High-Tech Gruenderfonds invests in young, high potential high-tech start-ups. The seed financing provided is designed to enable start-ups to take an idea through prototyping and to market launch. Typically, High-Tech Gruenderfonds invests EUR 500,000 in the seed stage, with the potential for up to a total of EUR 2 million per portfolio company in follow-on financing. Investors in this public/private partnership include the Federal Ministry of Economics and Energy, the KfW Banking Group, as well as strategic corporate investors including ALTANA, BASF, Bayer, B. Braun, Robert Bosch, CEWE, Daimler, Deutsche Post DHL, Deutsche Telekom, Evonik, Lanxess, media + more venture Beteiligungs GmbH & Co. KG, METRO, Qiagen, RWE Innogy, SAP, Tengelmann and Carl Zeiss. High-Tech Gruenderfonds has about EUR 576 million under management in two funds (EUR 272 million HTGF I, EUR 304 million HTGF II).