Private equity firm bullish on emerging businesses in nation

JG Investment, one of China’s emerging private equity firms, is looking to find its sweet spot in China’s rapidly developing emerging technologies sector, according to a top company official.

“We will expand our presence in the fifth-generation wireless communication technology, or 5G, this year. Projects with promising application scenarios will be our top priorities,” said Gui Zhaoyu, founding partner of JG Investment.

Gui, a former managing director of Carlyle Group, one of the world’s largest PE firms, said he was extremely bullish on businesses focused on the 5G small cell, which is basically a portable miniature base station with lower costs and a more convenient way of deployment compared with a macro base station.

“It is a promising business as consumers will have higher demand for data services with the onset of 5G,” he said. “If their smartphones are closer to many small cells, they will enjoy faster data speeds and more reliable services.”

Currently in China, most 4G base stations are equipped with traditional big cells, which often face traffic congestion due to the large number of users, said Diao Zhaokun from China Mobile Group Design Institute Co Ltd, a research institute of China Mobile.

“Yet a dense network of small cells is able to offer higher frequency bandwidths and increased data capacity. This new infrastructure can be used in densely-populated areas where a lot of people are using data at a certain point in time,” he added.

From the business perspective, Gui said that the 5G small cell will generate high returns with less costs for rooftop systems and operation fees. He added that JG Investment has already invested in a firm focusing on these technologies.

Gui’s views on 5G small cells are in line with JG Investment’s broader investment logic. Just as its Chinese name JianGu suggests, the firm bets big on investments with “long-term, stable returns”.

Founded in 2017, JG Investment has successfully invested in leading companies in high-end manufacturing, technology, consumption and healthcare sectors.

To spur innovation, Gui has developed a diversified team for JG. “Different from many PE firms whose partners are all PE professionals, JG has partners who are top professionals of PE, secondary market investments and legal services.”

The major team members are from top PE firms and investment banks including Carlyle, KKR, TPG, Tiger Fund, CICC and CITIC Securities.

Chinese home appliance leader Haier Electronics Group, tech giant Alibaba Group Holding Ltd, online travel website Ctrip, Focus Media and leading health management group Health 100 are among some notable companies in which the group members have invested.

Gui said that JG Investment has already identified several tech companies that are preparing to list on the upcoming science and technology board as potential investment targets.

He said the company has invested in Autel Intelligent Technology Corp, a Chinese manufacturer and provider of automotive aftermarket services, which is another listing candidate on the new board.

Gui said that Autel is a shining example of leveraging technologies. Its Tire Pressure Monitoring System, for instance, has been applied with advanced sensors and tools, which can enable a specialized vehicle diagnosis.

“The integration of forefront technologies in the automotive aftermarket has great potential for future growth with the fast development of Chinese automobile sector,” he said.

Statistics from China Association of Automobile Manufacturers showed that China sold 28.08 million automobiles and 23.71 million passenger cars last year. Though the figure witnessed a drop, China is still the world’s largest automotive market.