Legend Capital, a venture capital and growth investment firm in China, has closed the transfer of portfolio companies from LC Fund IV, a 2008 fund, into a USD200 million continuation vehicle.
Accounts managed by an affiliate of Hamilton Lane acted as lead investor in the transaction, with several other prominent institutional investors participating in the syndicate. The investors also committed follow-on capital for strategic investments in the portfolio companies.
LC Fund IV investors have the option of liquidity or opportunity to maximise portfolio companies’ value potential. Legend Capital, founded in April 2001, is an independent venture capital investment subsidiary under Legend Holdings.
The fund has a five-year holding period. According to Legend Capital, this deal provides the firm with the opportunity to maximise the value potential of the remaining portfolio companies through active management, alongside targeted follow-on capital.
According to PV Wang, managing director of Legend Capital, the deal will help the aims of both investors and the fund’s portfolio companies. “It provided existing investors in LC Fund IV with the option to obtain near-term liquidity for their investments, while also enabling us to enhance value for existing and new LPs,” he said.
Hao Chen, managing director and president of Legend Capital, points to the fact that secondary transactions are an important part of portfolio management for the China-based firm.
“They provide LPs with flexible liquidity options and create mutually beneficial solutions for portfolio companies, LPs and GPs. They are also a significant link in building a complete private equity eco-system in China,” said Chen.
In February 2012, Legend Capital took the new Chinese name Junlian. Legend Capital, which is now managing several USD funds and RMB funds with a total AUM of RMB45 billion, focuses on innovation and growth enterprises with operations in China, or related to China.
Mingchen Xia, co-head of Asia Investments at Hamilton Lane, commented: “This transaction demonstrates Hamilton Lane’s presence within the Chinese private markets and our ability to execute on complex secondary deals.”
The completion of a continuation fund for a portfolio of companies is one of the first transactions of its kind in China and an important milestone in the Chinese private equity market, in the view of Immanuel Rubin, partner at Campbell Lutyens.
“We expect to see more transactions such as this one, which demonstrate the opportunities available for GPs in the secondary market,” said Rubin.
Campbell Lutyens acted as exclusive financial advisor to the fund. Kirkland & Ellis and Rope & Gray served as legal counsel.
