The COVID-19 pandemic in 2020 has prompted the capital market to focus on the urgent need and development of the biotech sector. Noting the importance and potential of the sector post-pandemic, CDIB Capital, a subsidiary of China Development Financial (hereinafter “CDF”), completed the fund-raising of around NT$3.11bn and registration in December for its second NT dollar-denominated biotech fund “Healthcare Fund II”, a large new biotech venture capital fund in Taiwan. James Ho, Chairman of CDIB Capital Healthcare Ventures, said that excluding renminbi-denominated biotech funds and own funds, the two domestic biotech funds CDIB Capital manages have a combined value of nearly NT$5bn, which can inject fresh money into Taiwan’s biotech sector.
Healthcare Fund II is the second NT dollar-denominated biotech fund after CDIB Capital established Healthcare Fund I with NT$1.75bn in 2014 with a size nearly double that of the first fund. Main investors include, besides CDIB Capital, National Development Fund of Executive Yuan, VCs of other financial groups, life insurers, Taiex- and TPEx-listed firms, biotech-related enterprises, conventional industries and family offices. This fund has attracted a wider range of investors than the first one, indicating the resource integration and professionalism in biotech investment of CDIB Capital’s biotech investment management team has won the confidence of and gained favor with domestic investors. The team will play a more important role in directing funds into domestic and overseas biotech companies with global potential.
Over 60% of Healthcare Fund II’s capital will be allocated to Taiwan-related targets, aiming to achieve two objectives of supporting Taiwan’s biotech sector and creating excellent returns for the fund. Its investment strategy is to diversify asset allocation to build an investment portfolio with a good risk-reward ratio by mainly investing in young firms with high earnings growth and firms at the expansion stage with fair earnings growth. Sectors to invest in include new biotech drugs (including cell and gene therapy), medical technology, and digital healthcare and services, among other health-related fields. The investment is divided into build-up, expansion and mature stages. The investment team will implement its investment concept in a bid to create more leading biotech companies for Taiwan and to generate outstanding returns for fund investors.
James Ho believes that the global economy has faced severe challenges under COVID-19 in 2020, and that whether it can emerge from the pandemic unscathed in 2021 depends on more funds pouring into the biotech sector to drive R&D breakthroughs. The establishment of Healthcare Fund II exemplifies CDF’s responsible investment strategy post-pandemic, whereby it expects to create more benchmark biotech enterprises and create outstanding returns for investors, as well as becoming an important force in containing the virus to protect the citizens of Taiwan.