Chinese firm targets carbon mitigation with debut evergreen fund

CM Venture Capital, a Chinese VC firm targeting international and domestic businesses promoting carbon mitigation, is planning to launch an evergreen private markets fund, affiliate title Private Equity International understands.

The Shanghai-headquartered manager will initially seek $100 million for The CM (Carbon Mitigation) Evergreen Fund, according to two sources with knowledge of the matter. It is expected to target a first close by the end of Q2 2024 with capital from existing investors.

Unlike other evergreen funds – most of which are geared towards individual investors – this vehicle will primarily target corporate investors, the sources said. CM Venture Capital’s existing LP base comprises the investment arms of multinational companies such as British American Tobacco, Samsung and General Electric, according to its website.

The firm is still evaluating potential liquidity mechanisms for the fund, the sources said. All exit proceeds, at least initially, will be reinvested.

CM Venture Capital declined to comment.

According to PEI data, there have been at least five Chinese evergreen funds launched since 2012. The largest of these was the Hong Kong-headquartered Capital Today Evergreen Fund, which was launched in 2014 and had raised $602 million as of 2016, followed by the San Francisco-headquartered HCP China Capital Appreciation Fund, which launched in 2013 and had raised $539.5 million as of last year.

Formerly known as China Materialia, CM Venture Capital was founded in 2010 by Min Zhou, a former principal responsible for fund of fund investments at Silicon Valley Bank Capital, according to LinkedIn. Her co-founder, Patrick Berbon, was previously a senior consultant at risk analysis business Performance Improvement. Both have PhDs in material sciences.

The firm targets start-ups across industries such as new materials, hydrogen energy, sustainability and advanced manufacturing. It invests across China, the US and the UK.

CM Venture Capital now has around 1.5 billion yuan ($208.4 million; €192.5 million) of assets under management across three yuan-denominated funds and three USD-denominated funds, according to PEI data. It has raised at least 200 million yuan towards a 300-million-yuan target for CM Venture Capital Fund III RMB Fund.

The firm’s existing LP base also includes the likes of Saudi Basic Industries Corporation, Shanghai Yangpu Government, Netherlands-based Stichting Pensioenfonds SABIC and Germany’s Henkel.

CM Venture Capital has invested more than $250 million to date, generating a 30 percent IRR, according to its website. Example investments include UK-headquartered Econic Technologies, which enables manufacturers to convert waste carbon dioxide into carbon-based products; NovoNutrients, a US business that transforms hydrogen and carbon dioxide into food and feed ingredients; and China-based Enwise, which converts organic waste into energy.