CreditEase China, one of the world’s largest microcredit and wealth management firms, is raising a $50 million fund to invest in Israeli business and technology.
The group has made Israel a priority in its investment strategy. It partnered with veteran investors in Israel Tayman Kan and Benjamin Weiss to establish the CreditEase Israel Innovation Fund (CEIIF) last year, to create its first Israel-focused venture-capital/private equity fund. The group’s previous fund aimed at Israel amounted to $32 million.
CEIIF is hosting a delegation of 37 Chinese business executives in Israel this week.
CreditEase employs 50,000 people in 100 Chinese cities and services over 1 million borrowers, according to a statement from the company. The group became serious about investing in Israel about a year and a half ago, Weiss said, and has had three executive delegations visit Israel since. The next fund could amount to $100 million, Weiss said.
“They’re basically pinning their venture capital business in Israel,” Weiss said. “In my opinion this group, CreditEase, could end up funding Israeli high-tech for the next 10 to 20 years.”
The investors are interested in a range of opportunities, including smart manufacturing, artificial intelligence, and augmented reality technologies.
There is significant interest in early stage companies, said Tayman Kan of the CreditEase Israel Innovation Fund.
“In China we don’t have as much original innovation,” he said. “There’s the appetite for individual investors to bring back technologies to China to grow.”
As the world’s second-largest economy shifts its identity from a manufacturing and labor-intensive economy to a high-end innovative force, Chinese firms have been flocking to Israel seeking out new technologies. Asian giants including Alibaba Group, Hutchison Water Ltd., and Huawei have set up R&D centers, invested in funds and snapped up Israeli startups and companies.
Chinese conglomerates like the Kuang-Chi Group have set up funds and are investing in Israeli companies; Chinese IT corporation Neusoft announced it would set up a $250 million fund to invest in Israeli medical technologies.
Many of the investors in the CreditEase delegation are Western educated or influenced, and are owners of medium and large businesses in a variety of industries. They appreciate foreign technology and have an awareness that China needs to reach out to the world, Weiss said.
The group hopes the visiting delegations will help raise brand awareness for CreditEase among Israelis. Although it is a leading company in China, it is relatively unknown in Israel.
Some investors hail from Beijing and Shanghai, but the CEIIF seeks out investors in second-tier Chinese cities, such as Wuhan and Nanjing. These cities lack direct flights to Israel but are home to millions. The city of Wuhan, in central China, has a population of over 10 million, while Israel’s population is around eight million.
“There’s huge untapped access to capital but also businesses that can work with Israeli companies and find cooperation. We’re doing that across the country to create that brand building for Israel,” Weiss said.