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Mobile heavyweight buying into listed state-owned companies as well as tech startups.
China Mobile's investment binge continues as it snaps up strategic stakes in domestic tech firms, including a US-sanctioned video company.
But in its two-track investment strategy, the mobile giant is also buying into large listed state-owned companies.
In the latest deal, investment arm China Mobile Capital completed the purchase of 340 million shares in Dahua Technology, China's second biggest video surveillance company.
The 5.1 billion Chinese yuan (US$742 million) stake will be used for developing smart IoT, expanding smart manufacturing and building a new R&D center, Dahua said.
The partly state-owned firm is pushing into AI-driven segments such as machine vision, robotics and smart security inspection, offering some potential synergy with China Mobile's fast-expanding cloud business.
Figure 1: The Chinese operator is on an investment binge.
(Source: Grid Scheduler on Flickr (public domain))
Outside China, Dahua is perhaps best known as a potential security risk, being added to the US entity list in October 2019 because of its supply of surveillance gear to Xinjiang police.
Earlier this year, the Australian government removed from its offices more than 900 security cameras made by Dahua and Hikvision, China's biggest video security firm. UK MPs have also called for the removal of Dahua and Hikvision.
China Mobile Capital's other recent investment – its fifth for the year, according to the Qiqicha database – is B round financing for chip design firm Wuqi Microelectronics.
Wi-Fi 7 chips
The transaction was made through the China Mobile Equity Fund (Hebei Xiongan) Partnership, a RMB3 billion ($440 million) fund 44% owned by China Mobile Capital that was set up in 2019. So far, it has invested in ten companies, including two this year.
Wuqi's main business is designing Wi-Fi 6 chips and it says the fresh investment will help speed the development of current generation chips and support research into Wi-Fi 7.
These are just two of the dozens of strategic and startup investments China Mobile has made through China Mobile Capital and its other vehicle, China Mobile Investment Holding, since they were established by the parent company, China Mobile Group, in 2016.
But the two firms have also invested in 11 big listed stocks, mostly state-owned companies, in the past four years.
This includes $6.5 billion for a piece of China Postal Savings Bank two weeks ago, $287 million for 10% of Phoenix Media in February and the purchase of $103 million of Eastern Airlines shares in January.
These are good investments because of the historically low stock prices of China's listed companies, an unnamed investment banker told Shanghai Securities News.
"For industrial giants with large amounts of cash, it is a good opportunity in terms of business integration and financial investment," the executive said.
China Mobile Capital's past investments include handset player Xiaomi, listed cloud company Ucloud and tourism IT specialist TravelSky. As of December 2021, it had more than 80 portfolio companies.
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— Robert Clark, contributing editor, special to Light Reading
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