IBM and Lehman Brothers have joined together to give China’s established businesses a helping hand. Or rather to give them a share of up to $180m in private equity the two US firms have set aside to invest in Chinese companies.
Wisely, their China Investment Fund is not looking to compete with the growing number of western VC firms scouring China for suitable start-ups to invest in.
Instead, the two US firms want to dispense their largesse on established later-stage business which rely heavily on IT and have significant opportunities to expand.
Lehman Brothers and IBM will each contribute $90m to the fund. More in this New York Times article.
Sounds like a interesting idea, not least because it plays to each partners strengths and reduces the chances of getting their fingers burnt investing in risky start-ups or the latest internet fad.
Talking of internet fads, Oak Pacific Interactive has acquired Xiaonei.com, a leading Chinese social networking site similar to the west’s Facebook.com according to Red Herring.
OPI plans to merge Xiaonei , which has around 1m users, with its own Facebook copy, which is called 5Q, thus creating the dominant player in China’s fragmented social networking industry.
OPI is backed by Silicon Valley VC firm Doll Capital Management, and buyout firm General Atlantic. It has spent around $20m investing in Internet companies in China.
The acquisition of Xiaonei is the first such deal to be made public, but OPI plans to announce another deal next month.
More on the China’s fledgling social networking industry in this EngagingChina story.