NZ companies add weight to China venture

By DANIEL RIORDAN

Listed technology investors IT Capital and Savoy Equities are moving into China, looking to benefit from its membership of the World Trade Organisation.

China is expected to join the WTO near the end of this year, and the New Zealand companies say improvements in its investment regime and business environment are already significant.

ITC is doubling its assets under management by helping form a $US20 million ($43 million) venture capital fund in China, which it will manage.

An ITC-led syndicate is contributing $22 million to the fund which will invest in Chinese-based technologies as well as helping ITC's New Zealand and Australian portfolio companies to expand into China.

The members of the syndicate have not been disclosed, and neither has ITC's equity stake in the syndicate.

ITC's bottom line will benefit in management fees and whatever profit share it takes on the fund's investments.

Four Chinese investment companies are contributing the fund's remaining $21 million.

The fund is the first of its kind in the Tianjin region of Northern China, and the Tianjin government has given its blessing.

The deal comes on the back of ITC's strategic alliance with marketing consultant Science Center International, which has been involved with Tianjin for 15 years.

ITC's chief executive, Philadelphia-based Jeff Dittus, said China's pending entry into the WTO had made it a better place in which to do business.

The rules governing foreign investment were now better-defined, and the amount of capital and knowledge flowing in placed it second only to the United States in its potential for deals.

Mr Dittus said China's internet and telecommunications industries in particular were growing rapidly.

ITC's move follows Savoy's decision to buy 49 per cent of Shanghai-based Chengao Enterprise with an option to acquire an additional 2 per cent.

Chengao, which trades profitably as JetInfo, serves two million internet users and expects to reach three million by the end of the year with its real-time financial information products.

Savoy, the former controlling shareholder in Dairy Brands and former promoter of Auckland's cancelled Britomart project, changed its focus to technology investment this year.

The new investment is its second following the major stake it took in February in wireless and internet firm Safety Net (NZ).

Savoy Equities chief executive Kerry Haycock said the company was keen to make further use of its Chinese contacts through senior shareholder Jihong Lu.