(Yicai) Aug. 3 -- Chinese private equity funds have become more China-centric both in terms of investment targets and preferred card game.

Chinese PE funds raised USD59.5 billion in the second quarter, of which USD58.4 billion was raised by yuan-denominated funds and USD1.1 billion by US dollar funds, according to a recent research report from China Renaissance. But the total was lower than in the first quarter and the 10-year quarterly average of USD76 billion.

At social gatherings too, investors in China’s PE fund now prefer to play the local card game Guandan rather than the previously popular poker variant Texas hold’em, one told Yicai.

Despite the amount raised by yuan funds falling for the second straight quarter, US dollar funds accounted for just 1.8 percent of the total in the three months ended June 30, China Renaissance said. In the past five years, it was 10 percent.

More than 90 percent of the limited partners at Redpoint China Ventures’ first yuan-denominated fund launched in 2017 were market-oriented investment institutions, founder and Managing Partner Yuan Wenda said. Most of the limited partners contacted for its second yuan fund in 2020 were local government guidance funds, Yuan added.

Chinese state-owned and government guidance funds are two of the few types of limited partners with sustainable investment capacities in China’s private equity market, said Yang Xiaolei, chief executive of China Venture Information.

But the risk appetite of government guidance funds is much lower than that of financial investors, Yang noted. The accumulation efficiency of investment funds in Beijing is not as high as before, while funds in Jiangsu, Guangdong, and Zhejiang provinces are growing very fast, he pointed out.

In May, Zhejiang and Guangzhou set up 113 and 107 new funds, respectively, the most nationwide, data from China Venture Information showed. The funds invest in fields such as science and technology innovation, manufacturing, and semiconductors. Among them, there were CNY50 billion (USD7 billion) high-quality industrial development guidance funds set up in Wenzhou, Zhejiang.

Hardware technology, advanced manufacturing, and new energy and new material projects were the major investment targets in the first half, making up nearly 60 percent of the total, China Venture Information’s data showed. Venture capital and early-stage investment were nearly 80 percent of the total, as it has become commonplace for government guidance funds to invest in early-stage and small projects.

Editor: Futura Costaglione