Investing in computing power, increasing investment in robotics, and insurance funds digging for opportunities in hard technology

Insurance funds with substantial assets are actively “digging for gold” across core tracks such as computing power and robotics through diversified approaches, becoming an important force for driving technological innovation and industrial upgrading, and also reflecting a strategic shift in how insurance capital is allocated in an environment of low interest rates. On March 23, China Life Investment announced that the China Life Dual Carbon Fund, managed by its subsidiary China Life Capital, successfully led the Series C financing of Favo (Suzhou) Robot Systems Co., Ltd. (hereinafter “Favo Robotics”). This is just one example of insurance funds actively laying out the technology innovation sector.

In recent years, the momentum for insurance funds to establish or participate in private equity funds in the technology sector has continued to increase. In the industry’s view, the long-term “patient capital” attributes of insurance funds are highly compatible with the development patterns of tech innovation industries, making it a core advantage for insurance funds to empower new quality productive forces. However, insurance capital’s move into the technology sector still faces challenges such as risk mismatches, capability shortfalls, and capital constraints.

Invest in what’s promising; invest in what’s new

From the primary market to the secondary market, insurance funds are appearing more and more frequently in the field of technological innovation.

On March 23, China Life Investment announced that the China Life Dual Carbon Fund, managed by its subsidiary China Life Capital, successfully led the Series C financing of Favo Robotics. China Life Investment said that investing in Favo Robotics is an important layout of the China Life Dual Carbon Fund on the robotics track. It is both a vivid practice of insurance funds serving the national strategy of technological innovation and an important exploration of using patient capital to accompany China’s robotics companies as they move onto the global stage.

In addition to directly leading investments in growth-stage tech innovation companies in the primary market, insurance funds also invest in the “hot players” in the market through indirect investment. Recently, the Shanghai Stock Exchange accepted the filing of Unitree Technology’s IPO application for the Science and Technology Innovation Board. Unitree Technology may even be aiming to become the “No. 1” humanoid robot company on A-shares. Several insurance companies indirectly invested in Unitree Technology by participating in private equity funds as limited partners (LPs). Specifically, China & MetLife, the Taibao Changhang Equity Investment Fund (Wuhan) Partnership Enterprise (Limited Partnership), and AIA Life all invested in Nanjing Jingwei Chuang No. 3 Investment Partnership Enterprise (Limited Partnership), which holds shares in Unitree Technology. Postal Savings Life also took a stake in the China Internet Investment Fund (Limited Partnership), which likewise holds shares in Unitree Technology.

In recent years, China’s domestic economic and industrial structure has undergone profound transformation, and new quality productive forces are accelerating their formation. Besides private equity funds, insurance funds have also actively participated in technology innovation investment through various models. In February of this year, Lankei Technology listed on the Hong Kong Stock Exchange. Lankei Technology is a data processing and interconnect chip design company focused on providing innovative, reliable, and high-efficiency interconnect solutions for cloud computing and AI infrastructure. Judging from the offering results, China Taikang Life became the company’s cornerstone investor. By adding exposure to the hard-tech sector through secondary-market cornerstone investment.

For the logic behind insurance capital concentrating investments in cutting-edge tech tracks such as computing power and robotics, Wu Zewei, a special research fellow at the SuShang Bank, analyzed that in the current macro environment where low interest rates and a scarcity of assets coexist, insurance funds’ push into hard technologies such as computing power and robotics mainly aims to balance asset-liability matching while pursuing long-term, steady returns. Computing power and robotics align with the country’s strategic direction, and are in the early stage of industrial explosive growth, with growth resilience capable of weathering economic cycles. By involving insurance capital through professional platforms such as private equity funds, insurance funds can share the long-term capital appreciation brought by technological innovation while controlling risk exposure, and improve the overall return-versus-risk structure of the investment portfolio.

How to truly practice “patience”

While seizing good investment opportunities, insurance companies also cannot ignore the risks they face when investing in hard-tech enterprises.

There is some conflict between the high risk of tech innovation investing and the rigidity of insurance funds’ long-term liabilities. Especially under the “invest early” and “invest small” approach advocated in the tech innovation industry, early-stage technology companies typically have long R&D cycles and immature business models—this is a stage where risks are concentrated, which runs counter to insurance funds’ risk preferences.

The professionalism required for technology investment also sets higher requirements for the capabilities of insurance funds’ investment teams. Wu Zewei said that insurance funds’ accumulated strengths are relatively weak in areas such as industry technology assessment, valuation and pricing, and post-investment empowerment, making it difficult to precisely identify technical and commercialization risks.

As insurance funds become genuine long-term capital and patient capital, actively participating in tech innovation investment requires building a dedicated risk-control system across the entire chain—from pre-investment, to during-investment, and to post-investment. Wu Zewei suggested that for insurance companies, the pre-investment stage should establish independent industry research teams and a technical due diligence mechanism, avoiding the simple application of traditional credit assessment models. The during-investment stage should strengthen penetrative management and valuation monitoring, strictly set investment ceilings and concentration indicators, and use structured design to balance risk and return. The post-investment stage should establish a long-term evaluation mechanism suited to the laws of technological innovation, bring in professional post-investment value-add resources, and improve valuation models and risk-warning systems for non-listed equity, so that risks can be measured, controlled, and bearable.

Beijing Business Daily reporter Li Xiumei

(Editor: Qian Xiaorui)

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