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Pitango looks to partner in China

Israeli venture firm Pitango Venture Capital plans to team up with a Chinese partner to launch a $100 million to $200 million fund with a focus on China’s startup companies, according to sources familiar with the matter.

The sources say that Pitango, run by Nechemia Peres, son of Israeli President Shimon Peres, is in talks with Shenzhen Capital Group to raise a China-focused investment fund.

“Pitango is a big name in Israel but still little-known in China, so now it should be the right time for Pitango to team up with a right partner to expand its investments in China like what its rivals have already done,” said one source.

No agreement has been inked between the two parties, said the sources, who declined to be identified as the negotiations are confidential. Pitango hopes to mainly invest in China’s technology-related sectors through the new fund, they said.

Shenzhen Capital declined to comment.

The sources said that a Pitango delegation led by Peres recently traveled to China to meet government officials and business partners including senior representatives from Shenzhen Capital.

The local Shenzhen government has shown strong support for Pitango’s plans for a Chinese fund, which would also need approvals from financial regulators in Beijing, said the sources.

Not the First

Herzliya-based Pitango, which in 2007 raised $330 million for its fifth fund, would not be the first Israeli firm to go to China.

Tel Aviv-based Infinity Venture Capital raised about $300 million for Infinity Israel-China Fund, which closed in 2007. Infinity was launched by a group consisting of IDB Holding subsidiary Clal Industries of Israel, state-owned China Development Bank and China Singapore Suzhou Industrial Park Ventures Co., a firm backed by both the Singaporean and Chinese governments.

For a long time now we have been examining cooperation and projects in China.

Anonymous source

An official at Pitango said the firm has had close strategic relations with Shenzhen Capital for several years.

“For a long time now we have been examining cooperation and projects in China,” the official said. “A year ago we made our first joint investment in Jinko [Solar Energy Co.] and we continue to work towards finding joint activities and strategic investments in China.”

Jinko, based in the Xuri area of the Jiangxi Province, last year raised $35 million from Pitango, Shenzen and CIVC Partners, according to Thomson Reuters (publisher of VCJ).

In July, Wilson Lee, president of Shenzhen Capital, based in the Chinese boomtown of Shenzhen, bordering Hong Kong, told Reuters that the firm aims to double its funds under management to more than $2.48 billion in three years. —George Chen and Tova Cohen, ReutersDEALWATCH: Five recent investments by Pitango Venture Capital

AeroScout Inc._RFID-locating chipsets for WiFi-based enterprise networks.

LifeBond Ltd._Hemostatic solutions for trauma wounds.

Neebula Systems_Management tools for virtual computer environments.

WeFi Inc._Open Wi-Fi networks.

YCD Multimedia Ltd._In-store digital media solutions.

Note: Investments made between June and August 2009. Source: Thomson Reuters