China-focused venture capital and private equity funds raised less money last month even as new funds continued to emerge amid optimism over China's over-the-counter equity market.

Sixty VC/PE funds raised an aggregated US$1.68 billion in April, down 34.4 percent from March and 48.2 percent lower year on year, Beijing-based Zero2IPO Research said in a report released yesterday.

Fifty-six were yuan-denominated funds which raised US$1.25 billion, or 74.7 percent of the total, while foreign currency-denominated funds took up the rest, data showed.

"The decrease reflected a sluggish fundraising market since January while fundraisers' enthusiasm continued to run high with an increasing number of new funds being set up," Yang Mei, a researcher with Zero2IPO wrote in the report.

There were 74 PE/VC funds set up in April, a 160-percent surge from a month earlier, according to the report. The average fundraising target was US$1.48 billion, more than doubled from an average of US$579 million in March, data showed.

Of the new funds, 50 are planning to invest in firms traded on China's over-the-counter equity market, a national equity trading system that provides an alternative funding source for non-listed small firms.

The rise of the OTC market has caught the attention of PE/VC firms as it provides a new exit channel for funds.

By the end of April, there were 2,343 firms traded on the OTC board, with a market capitalization of 1.1 trillion yuan (US$177.4 billion), according to data from the National Equities Exchange and Quotations, the board's operator.

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