Sequoia China wants to raise US$6 billion in a new fund with a state partner, sources say.

(Reuters)- Sequoia Capital China is joining forces with a state-owned venture capital fund and e-commerce giant JD.com to raise up to 40 billion yuan ($5,8 billion) to create a company focused on investing in large technology companies, sources said.

The Starquest Capital fund, or Xingjie Capital, highlights the growing efforts of Chinese venture capital investors to fatten their portfolios as valuations and funding needs increase, with companies taking longer to go public.

Startups in China are up to 40 percent more expensive than their counterparts in the US and, in some cases, even valued at twice the price, according to recent investor estimates.

The Starquest fund has so far raised about 10 billion yuan from domestic sources such as banks, one of the sources said. It is in talks with potential investors to secure the remainder, the sources told Reuters on condition of anonymity, as the plans are confidential.

Sequoia China said it is a shareholder in Starquest, but does not participate in the fund's management. Starquest, the state-owned venture capital fund, and JD.com declined to comment.

The controlling shareholder of the venture capital fund - China Reform Holdings - did not respond to a request for comment.

According to sources, Starquest will primarily seek investment opportunities in private equity firms and late-stage technology investments, particularly in sectors that Beijing considers strategically important, such as artificial intelligence.

China has been driving growth in sectors such as robotics, semiconductors, and autonomous vehicles, while in artificial intelligence it aims to be a global leader by 2030.

By Julie Zhu