Sequoia Capital’s Chinese affiliate, which is preparing to split from the Silicon Valley venture firm, is in talks to raise around 20 billion yuan ($2.8 billion) for a new Chinese currency fund from domestic backers including the government of the city of Hangzhou, according to a person with direct knowledge of the matter.

Hangzhou’s local government revealed the registration of the latest Sequoia China yuan fund  last year, but its size hasn’t been disclosed or reported previously. If it meets the target, it would be one of China’s biggest domestic currency venture funds this year. The size is a sign of strength for Sequoia China, because raising big yuan funds from state-backed investors isn’t easy in the current environment, in which China’s economic rebound is faltering and many local governments are saddled with debts.