Guangzhou Sino-Israel Bio-industry Investment Fund (GIBF), whose Managing Partners are Dr. Shuki Gleitman (former Chief Scientist of the State of Israel and one of the pioneers who laid the foundations of the Israeli high-tech industry), Prof. Shlomo Noy (former Acting CEO of Sheba Medical Center and the manager of the hospital’s R&D array and its tech transfer company), Avner Lushi (one of the top Israeli medical venture capitalists) and Carl Geng (formerly a senior official in the Chinese central government in the field of national R&D programs and international collaborations), announced today the first closing of its second fund in the amount of $300 million (2 billion yuan).
GIBF is a Chinese medical investment fund established in 2016 in partnership with the Government of Guangzhou, the third most important city in China and the capital of Southern China. Unprecedentedly, although it is a Chinese fund for all intents and purposes and with a government affiliation, the fund is managed and controlled by its Israeli partners.
Respectively, it is the only Chinese fund under foreign management licensed to make private equity investments in China by the Chinese Securities and Exchange Commission (AMAC Division). The fund has a unique investment model in which it establishes Chinese joint ventures (JVs) in partnership with foreign companies.
Unlike in China, where local investors seek rights to the Chinese market and control over the Chinese JVs, the Chinese subsidiaries established in cooperation with GIBF are controlled by their foreign parent companies, with GIBF investing considerable sums in the JVs ($3-8 million), holding minority equity positions and assisting in their operations.
This is the only viable option existing today for foreign companies to build value in the Chinese market and not to give up this huge potential value at an early stage to a local partner. Subsequently, this added value will be reflected in the JV’s exit model.
The first fund, GIBF 1, which amounts to about $100 million (600 million yuan), has so far made 8 investments in some of the best Israeli companies in the field of medical devices and digital health: InMode, Carbofix, Visionix, Alpha Omega, CorNeat, Vitalarter, Neurotech and G-Medical. GIBF recorded its first significant exit following InMode’s IPO and is in advanced stages of two more exits.
In addition, in the coming weeks, GIBF 1 will announce the closing of 4 additional investments that are currently in the final approval processes and it intends to invest in a total of about 15 companies.
All this, despite the severe travel restrictions resulting from the Covid-19 pandemic and due to the fact that the fund has strong infrastructure in both China and Israel, which allows it to complete investment transactions and establish new companies in China even in a situation where Israeli executives’ ability to travel to China is very limited.
The fund’s infrastructure in China includes strong local team, government support, close contacts with hospitals and the CFDA, handling all administrative, legal and accounting issues, physical infrastructure, etc.
GIBF’s second fund will operate on a similar model, but it will focus on Israeli and European biotechnology companies, which are developing innovative drugs and are in phases 2-3 of clinical trials. Dr. Gleitman explained that: “There is currently a global harmonization of clinical data and therefore the leading regulatory authorities recognize clinical trials conducted in other countries as long as they are carried out in accordance with accepted standards.
It is our intention, therefore, that the Chinese JVs we establish will conduct some of the global clinical trials in China, funded by our fund, and the results of the JV’s trials in China together with the results of the parent company’ trials in the West will be submitted as one package to the US, Chinese and European regulators.
Two executives who started their careers at the fund several years ago and have reached the rank of VP will join Fund 2 as young partners as part of the fund’s succession plan – Ms. Shimin Hong, VP of Operations who is a Guangzhou native, and Mr. Yair Govrin, VP of Business Development, an Israeli who is an expert for China, speaks fluent Chinese and lives in China.
Prof. Noy added: “At the same time, we will increase the amount of our investment in each JV to about $15-20 million, and it is also possible that additional Chinese investors will join these investment rounds in syndications. In addition, we are establishing an entity that will coordinate the clinical trials which will be conducted at the Guangzhou advanced hospitals in collaboration with all relevant parties, such as hospitals, the local Health Ministry, the Chinese FDA, etc., and while adhering to proper international standards”.
The group headed by Dr. Gleitman also operates a life sciences technological incubator in Guangzhou, which operates in accordance with the renowned Israeli incubation model. So far, about 15 companies have been established at his incubator, some of them based on foreign technologies, including Israeli, German and British, and some on Chinese entrepreneurship.