Jack Ma’s Shanghai-based private equity firm has failed to attract domestic investors, spurring concerns about its long-term viability.

Sources told The Information that Chinese investors are refraining from funding Yunfeng Capital as they eye the political risks of supporting the Chinese billionaire. Ma co-founded the company in 2010 with Target Media founder David Yu.

The Alibaba founder’s business activities have been under intense scrutiny since he publicly criticized Chinese financial regulators in October 2020. From that point on, Ma has remained out of the limelight. In July, the 57-year-old tycoon was spotted for the first time in Europe after almost two years of silence.

People briefed by the firm’s managers and its existing investors said state-backed entities do not want to support anyone who might be on the other side of current Chinese leader Xi Jinping. In China’s private equity and venture capital industries, funds denominated in yuan are provided mainly by state-owned investors.

Yunfeng Capital’s links to Ma also undermine its appeal to nongovernment backers. A Beijing-based wealth management company that had taken part in its domestic fund told an investor last month that it would no longer back Yunfeng because it feared losing clients if it was seen as Ma’s associate.

Xi is preparing to assume a potentially historic third term on October 16 at the National Congress. 

A banker working with Yunfeng Capital disclosed that the company is switching to find deals in overseas markets as its homeland chances dwindle, and Southeast Asia has become its top option. Indonesia’s PT Etana Biotechnologies said earlier this month that it received new money from Yunfeng but did not specify how much.

The company has backed practically all well-known Chinese start-ups, including Edraw, Horizon Robotics, Nreal, Xingyun, Xiaomi, EV maker Xiaopeng, video app Kugou, and even EV battery maker CATL.

The company has also tried to break away from Ma ever since he retreated from public view. According to an archived copy of the website, Jack Ma’s picture and profile were prominently displayed on the homepage as of late 2019. But he is no longer mentioned on Yunfeng’s entirely revamped website. Chinese corporate data website Qichacha shows that Jack Ma controls 40% of the principal Chinese corporate entity of Yunfeng.

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