By Lauren Fedor
Kuang-Chi, whose subsidiary KuangChi Science is listed in Hong Kong with a market capitalisation of about $2bn, said on Monday it was investing $30m in Gilo Industries, an aerospace tech company that makes engines for jetpacks and unmanned aircraft. Kuang-Chi will take a 40 per cent stake in Dorset-based Gilo, valuing it at $80m.
Gilo Industries reported revenues of £915,000 and an operating profit of £45,562 in 2015, according to Companies House filings. The investment will help Gilo expand its business in Asia and “open relationships for Kuang-Chi in the UK innovation industry”, the Shenzhen-based company said in a statement. The funding will come from an innovation fund set up by Kuang-Chi last year to invest up to $300m in early-stage global companies.
This week, Kuang-Chi announced it was creating a second fund to invest $250m in companies focusing on the internet of things, artificial intelligence and virtual reality. Related article China’s answer to SpaceX pledges $1.5bn for space-travel theme park KuangChi prepares for manned tests of Asia’s first near-space tourism project.
“The UK has a very attractive atmosphere for innovation with great potential for further growth,” said Kuang-Chi's chairman, Ruopeng Liu. Mr Liu — dubbed the “Elon Musk of China” by the media, referring to the head of Tesla and SpaceX — said the investment in Gilo Industries would the be the “first of many” for Kuang-Chi in the UK. “This is the very start of Kuang-Chi's UK investment plans,” he said, adding that the sharp decline in the pound following the UK vote to leave the EU last June had made UK technology companies more attractive to global investors.
“Despite some fears surrounding Brexit, innovation is booming in the UK and Kuang-Chi has confidence in the UK market, which has a long history and a good reputation for innovation that will not fade away easily,” he said. “Investing in British start-up and growth stage technology-based companies is a key part of our long-term strategic plan to continue investing in the most exciting, disruptive and innovative technologies around the world.” Kuang-Chi, whose motto is “Future is Now”, has taken stakes in a range of aerospace companies in recent years.
Last September, KuangChi Science outlined plans to invest $1.5bn in a space-travel theme park that would take tourists in its helium balloon called the Traveller. The Hong Kong-listed subsidiary also bought a majority stake in Australian-listed Martin Jetpack, which makes commercial jetpacks, in 2015, and owns a stake in Canada-based Solar Ship, which operates cargo drops in remote places.
Most of the subsidiary's revenues come from the Cloud, which provides internet coverage, surveillance and disaster monitoring from a blimp. Kuang-Chi is just the latest Chinese investor to take a bet on UK technology after the Brexit vote. In October, CSC, China’s third-largest private equity firm, agreed a multimillion-pound partnership with British start-up incubator Founders Factory, led by entrepreneur and investor Brent Hoberman.
The partnership has said it plans to invest in five early-stage AI start-ups and launch two companies from scratch each year. Chinese investment group Cocoon Networks also set up a £500m fund in the UK last year, aimed at early-stage fintech, biotech and fashion tech start-ups.