China-based private equity firm Cathay Capital launched a RMB1.5bn ($226m) automotive technology fund on Monday, with 25% of the capital coming from automotive components supplier Valeo.
Valeo and Yangtze River Industry Fund, a vehicle formed by the government of Hubei province, are the cornerstone investors in CarTech Fund, which has also received backing from undisclosed additional investors.
CarTech Fund will invest the capital in China-based car and new mobility technology developers over a four-year period.
The fund will particularly focus on electrification, digital mobility, and autonomous and connected car technology, as China’s transport industry gears up to introduce autonomous vehicles.
Jacques Aschenbroich, Valeo’s CEO, said: “Innovation is Valeo’s DNA. In addition to investing more than 11% of its original equipment sales in R&D on a global basis, and with more than 3,000 development staff in China, Valeo is also actively looking into the potential of local startups, which form a particularly vibrant ecosystem in China.
“Following investments in venture capital funds in the United States, Europe and Israel, Valeo is rolling out its open innovation ecosystem in China. Through CarTech Fund, we plan to identify and develop more innovative products and technologies for our customers.”
Valeo has not been a large-scale corporate venture but was among the limited partners in Cathay’s $320m Cathay Innovation fund, which closed in June this year, as well as venture capital firm Iris Capital’s IrisNext fund and mobility-focused fund Maniv Mobility.